Borrowers Should Check All Details Of Their Contract

Those seeking out a new means of borrowing should always make sure that they are fully aware of all the terms and conditions involved to avoid an unpleasant financial surprise, claims one personal finance expert.

Credit Action, a national money education charity, has said that too many consumers fail to gain a full understanding of a financial product before applying for it, meaning that they can find themselves in monetary difficulty at a later date.

Referring in particular to credit cards, spokesperson Chris Tapp stated that many lenders levy a number of different charges and that it is important to recognise all of these in advance of signing a deal. He did not deny that such comparisons are likely to take time but insisted that without approaching borrowing carefully, costly mistakes could be made.

Those looking for a cost-effective means of borrowing with the benefit of clarity in the transaction might like to seek out some of the best loans on the market before undertaking any price comparison, given that in some situations personal loans can be more appropriate than building up debts on a card. Mr Tapp said of borrowing options: “The main thing to look for is the headline rate, which is still the most important thing. What rate of interest are you going to be charged? It is still important to compare the APR first and foremost.

“It is an action that will require a bit of time and effort because just as when you are buying a new car, you do not just compare one aspect of the car. You do not just compare top speed, you compare how many miles to the gallon you are going to get and these types of things.”

Recently, Lloyds TSB also commented on the fact that many consumers hold high levels of debt on credit cards and through other forms of borrowing - perhaps suggesting that more British consumers could benefit from cheap consolidation loans. According to the company’s Bank Mass Index, almost half of consumers in the UK are “financially overweight” due to high levels of borrowing and a lack of savings.

The bank recommended addressing high-interest credit cards and store cards as a good way of beginning to regain control over finances. Some consumers might find that debt consolidation loans help them to achieve this aim by converging a number of debts into an easy-to-handle monthly repayment.

“If you have large debts on credit or store cards, it might be wise to take out a loan to pay them off. Loans tend to have a much lower APR and the regular payments will ensure that your debt goes down instead of up! Just make sure you cut up your credit cards so you don’t end up with two debts to pay,” Lloyds advised.

Earlier this year, a study carried out by MoneyExpert revealed that rising numbers of people were struggling with credit cards, with more than five million people missing a repayment at some point in the six months leading up to December 21st. Those with a number of confusing debts might find that consolidating them into a single loan could make their financial dealings more manageable.

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