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More than 4 million fear they`ll be made redundant Consumers took on more mortgage debt in July Debts called in by parents Teenagers `scared of debt` Rising household costs could pressure people in debt Pensions debt may impact workers` retirement funds Welsh young adults `at highest risk of debt problems` Over 50s can`t afford to enjoy retirement because of debts Budget: tackling the nation`s debt Short-term debt: `no need for price control` The cost of clearing debt Education debt Tackling the national debt Number of mortgage deals on offer exceeds 3,000 Almost 5 million take on debt to pay household bills OECD: household debt more than 120% of disposable income Petrol price falls help people in debt Amount of mortgage debt taken on at lowest level in ten years Northern Ireland sees significant IVA rise Overdraft debt `becoming more expensive`

Cost of debt - CFA wants `level playing field`

18/12/2009

The Consumer Finance Association (CFA) has called for action making it easier to compare the cost of different kinds of debt.

The CFA, which represents providers of short-term personal loans, issued a press release on 27th November - two days after the Supreme Court ruling on unauthorised bank overdraft charges.

"Many borrowers use bank overdrafts or short-term finance products such as payday loans to smooth out peaks and troughs in their finances," said CFA chief executive John Lamidey.

"However, bank overdrafts are exempt from regulations that require lenders to show an APR for their loans. APRs [Annual Percentage Rates] are an inadequate measure for short-term borrowing and can be misleading, so what is needed is a simple method to show the total costs of borrowing so that customers can compare different forms of short-term finance, including overdrafts, on a like-for-like basis."

The press release goes on to illustrate the potential cost of two common forms of debt - a sample unauthorised bank overdraft and a sample online payday loan.

It points out the potential cost of carrying a £200 debt for 30 days:

• If the overdraft charged a flat fee of £5 a day, the cost of carrying the debt would work out at £150 - in other words, 75% of the debt itself.
• Through the payday loan cited, the cost would be £50 - in other words, 25% of the debt itself.

CFA members support the work of the OFT in seeking ways to ensure that all charges for consumer credit products are easy to understand, transparent, and enable informed consumer choice," Mr Lamidey concluded.

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More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according