Personal Debt

Falling into debt is becoming increasingly common, with rising bills and prices, relying on credit cards and borrowing is affecting more and more of us. There are many causes of personal debt whether it creeps up from mismanagement of money or happens suddenly:

Credit Cards and Loans: Interest rates come with every credit card and loan taken out, the more spent on a credit card and not paid off each month substantially raises the balance. Missing repayments incurs fees; bounced payments will mean extra charges from your bank as well the credit provider. It can be beneficial to shop around when looking for a new credit card, compare interest rates and look for cards with a 0% balance transfer fee, cutting the interest rate will greatly increase changes of paying off the balance.

 Overdraft: Relying on your bank account’s overdraft keeps personal debt growing, fees applied to the overdraft increases the amount needed to be paid back and means income is swallowed up by the bank.

Loss of income: Job loss and salary cuts are two of the highest causes of debt, losing income means budgets are severely comprised, being able to pay the mortgage and everyday bills can become difficult and a reliance on credit cards and savings may occur. This can happen through redundancy, illness and loss of overtime.

Gambling: Compulsive gambling is an addiction, the chance of winning big keeps people stuck in the cycle of spending and losing and spending more.

University: Sending a child to university is growing more expensive with rising tuition fees and living costs, both the parent and child are at risk of falling into debt where the outgoings overtake income and loans and grants may not be easy to apply for. 

Pregnancy: Bringing a child into a family can bring about a loss of income through maternity leave, reduced hours at work and higher costs in the home.

Transport: Rising fuel prices make owning a vehicle more expensive, car financing rates have risen along with the upkeep of the vehicle. Public transport fares are also rising above inflation creating more pressure on incomes.

Ignoring the debt: Pretending the debt does not exist is one of the biggest reasons for high personal debt. Paying off the minimum amount only each month keeps the interest rate often bringing more onto the bill.

For all of these there are organisations to help get people through the stress of unsecured debts.