The site reported that the Post Office has reduced selected interest rates on its personal loans by 1 per cent, making them among the most attractive on the market. It added that borrowers wishing to take out smaller unsecured personal loans would benefit the most from this, since there were few competitors operating on similar interest rates.

Another positive point was that the Post Office was charging no redemption penalties for early repayment of the personal loans, making it distinct from many competitors and easier for borrowers to avoid bad credit. The Moneyfacts website gave the Post Office loans four out of five stars.

One financial expert has been advising bank account holders with hefty overdrafts to look into taking out unsecured personal loans to pay them off.

Chief executive of MoneyDashboard.com, Gavin Littlejohn, said that repaying a personal loan could work out cheaper in the longer term than struggling to repay an overdraft or paying off credit card debts.

“Consider converting your overdraft – and any other debts you have – into a personal loan, as the interest is likely to be considerably lower,” he suggested.

“For example, if you need £5,000 to pay off your credit card and overdraft, you can pay interest of as little as 8.8 per cent APR over three years, with a total repayment of £5,679.”

He went on to say that consumers should only use credit cards to avoid going further overdrawn if they are sure that they can repay the full balance as soon as possible.

The finance company said that around 800 personal loans worth a total of £4.77 million were taken out for cosmetic surgery. By contrast, just under 1,000 loans were taken out to pay for medical surgery like hip replacements.

The British Association of Aesthetic Plastic Surgeons (BAAPS) said that its members carried out over 36,000 surgical operations last year, which represents a 67 per cent increase compared to 2008. Although the number of women having cosmetic surgery increased by 5.4 per cent during this time, male patients underwent the greatest increase, with a staggering 80 per cent rise in male breast reductions last year to 581.

Sainsbury’s Finance head of loans Steven Baillie commented: “Although the majority of personal loans are taken out for the usual domestic reasons such as home improvements and buying cars, a significant number, even in today’s economic climate, are used to fund more unusual expenditure such as cosmetic surgery. If you are planning on using a personal loan to pay for surgeries, often quite expensive procedures, it is important that you do your research as this could save you hundreds or thousands of pounds in repayments.”

Mr Baillie was referring to the unsecured personal loans available for Sainsbury’s shoppers who hold a Nectar card. These loans are generally considered to have the best rates of interest on the market, with a typical APR of 7.8 per cent for a loan of between £7,500 and £14,999.

However, there are also excellent value unsecured personal loans available online with a little searching, to suit every borrower – whether they want to undertake debt consolidation, buy a new car or have some cosmetic surgery.

As part of a wide-ranging review of personal finance, consumer affairs minister Edward Davey said that he wished to “improve the safeguards on consumer credit products, where this is necessary”. The Department of Business review will start later this year.

Its aim will be examine how well customers understand the terms and conditions set by unsecured personal loans and similar forms of credit, as well as the way that people who find themselves in difficulty with their borrowing are treated. Mr Davey said that he was concerned that some borrowers were at risk of taking out larger personal loans than they could not afford, because of a lack of basic understanding. He cited polls from last year by the Learning and Skills Council, which found that almost 90 per cent of customers could not make basic financial calculations.

This month, the new Consumer Financial Education Body also revealed that some 74 per cent of mortgage-holders were unaware how a 1 per cent increase in the Bank Rate would affect their repayments. The review will consider introducing a consumer test that potential borrowers must pass which demonstrates that they have understood what the interest rate on a personal loan is and what it will involve in terms of repayments.

Lenders may also be required to set out the total amount of interest repayable on an unsecured personal loan. Mr Davey also hinted that the rules on bankruptcy could be loosened up to help people struggling with their debts, pledging to oversee “an insolvency regime where those who can, pay, but those who can’t are helped to make a fresh start”.

As lenders continue to tighten their criteria for providing mortgages, credit cards or unsecured personal loans, access to one’s credit file is becoming more important. If you have bad credit it is important to know about it, so you can take measures to improve the rating. The new agreement, with Experian, Equifax, and Callcredit, will give individuals the right to access their statutory credit report online for the nominal sum of £2.

Anyone who has been the victim of identity fraud, or anyone who is officially classed as financially vulnerable will be allowed to access their credit report free of charge. Welcoming the agreement, consumer minister Edward Davey commented: “All consumers now have easier access to their £2 statutory credit reports, which will help them take better control of their finances.”

As credit reports are what lenders use to base their decision to grant – or refuse – credit cards or personal loans, it is important that the information held on them is accurate.

The report will also detail your outstanding personal loans or other financial commitments, as well as the number of late payments and their amounts. Positives on a credit report include records of debts paid off, so one way to improve a credit rating is to take out small loans – such as payday loans – and repay them swiftly, or to take out an unsecured personal loan for the purposes of debt consolidation, which can then be used to pay off outstanding loans and reduce the rest of one’s repayments to a more manageable monthly level.

The Fair Investment Company’s head of investment and pension research George Ladds recently said that savers who are able to put their spare cash away for longer periods will ultimately get a better deal than those who are only locked into six or 12-month savings schemes. Mr Ladds said: “This is because savings rates are still falling – those coming to the end of a deal will not be able to get as good a rate as they could a year ago whereas those who have locked their cash in for longer are still being protected against falling rates.”

At the end of last month, the Bank of England indicated that the number of people who have opted to save their cash during the global economic downturn had increased. A report by the bank said that in 2009, UK households placed a total of £24 billion into savings accounts while taking out a total of £20 billion in new personal loans.

This is the first time in 21 years that the amount saved by households was greater than the amount borrowed. Despite this, there is still a great demand for unsecured personal loans, especially for households or individuals with bad credit.

Personal loans are perfect for debt consolidation, which can be the first step to reducing outgoings and making saving possible. There are many great personal loans available online and a reputable lender will be able to help a potential borrower find the one that’s right for them.

Last week the Coventry Building Society marked My Money Week by sending staff to Stoke Park School and Community College to host a few “financial literacy lessons.”

The building society’s corporate responsibility manager Anna Cuskin told the Coventry Telegraph newspaper how the lessons work: “The students work through a variety of case studies to understand the cost of living, budgeting and how different financial products work. It is really important that young people learn how to budget and make informed decisions about financial products. Financial literacy is an important life skill.”

The students received data packs and underwent tutorials to ensure that they understood how budgeting and credit worked – and to see if they could avoid some of the pitfalls that lead to people ending up with bad credit. They were also shown the wide range of different financial products available on the market, such as unsecured personal loans, secured personal loans, car finance, credit cards, auto finance and store credit.

One of the pupils, 15-year-old Rosni Patel clearly took much away from the day: “I really enjoyed the session and we learned so much,” he told the paper. “I had no idea what a credit rating was, how it worked out, the difference between secured and personal loans, priority and non priority debts. I think it’s really important that all young people can learn this.”

The call follows a report from the Office of Fair Trading (OFT) which said that the market consisting of lenders offering payday loans – or other loans aimed at people with bad credit – was operating efficiently and fairly.

Payday loans company Payday Bank marketing manager Ohad Hessel told The Independent newspaper: “We are often the only source of lending for those refused credit and in need of emergency financial help. Using an APR is the wrong metric to judge payday loans as the average customer borrows money for just a few days.”

The Independent noted that the regulator concluded there was no reason at this time to change the system and impose new rules, but groups such as the Consumer Credit Counselling Service (CCCS) insisted that there was still room for improvement.

CCCS spokesman Tom Howard told the newspaper, “High-cost credit fills a niche for people who are excluded by mainstream lenders. Provided people know what they have to pay and manage their accounts well, then there is not a problem.”

“However, we would like to see the mainstream lenders step up to the plate and provide more options for these borrowers.”

Research has found that payday loans can save customers money compared to unauthorised overdrafts, with their punitive charges. Some firms offering such loans will charge £25 for every £100 borrowed for a month, but this is low compared to slipping into the red with the high street banks, who hit their customers with a monthly unauthorised overdraft fee, plus daily fees on top of that and a higher rate of interest.