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The top five selling personal loans in the UK at the moment all have interest rates of below 6.5 per cent. The Moneyback Bank offers an online loan at a rate of 5.9 per cent. Alliance and Leicester also offer a personal loan at the same rate of 5.9 percent. Slightly higher, coming in at 6.1 percent, are the personal loans from Halifax and Northern Rock. First Plus Exclusive offers a loan at 6.3 percent.

All of these rates are for online applications, although some of the lenders offer a range of application methods. The loans will only be approved for borrowers with good credit rates. They are also offered on a secured basis to homeowners. If you are looking for loans on an unsecured basis the rates are likely to be a little bit higher.

The Moneyback Bank offers you the option of earning back a proportion of the money that you spend on payment protection insurance. However, it is probably not advisable for all customers to opt for payment protection insurance in the first place. Alliance and Leicester now offer a fully automated online service which means that you can finalise the entire loan online and get your hands on that money faster. The Northern Rock 6.1 percent rate is fixed, while the Halifax loan offers a three month repayment holiday for the first three months of the loan.

If the Office of Fair Trading’s objectives are realized, and the banks lose a test case, they will “forfeit this multi-billion pound source of illegal profit forever” if consumers start to challenge them in the courts.

Now, many consumers are frustrated by the bank’s refusal to make repayments, in some cases even when the courts side with consumers and demand a refund.  According to some claims, this is the biggest illegal money grab in the UK.

Matthew Taylor, Speaking in a debate in parliament’s Westminster Hall, claims that the banks do not fight any refund cases, preventing a definitive ruling on whether the charges are illegal.  If they did fight a case, and the charges were deemed illegal, they will loose almost £4.5 billion in charges annually.

Mr. Taylor said:

“Every time court action is threatened, the banks refuse to defend themselves. The only possible reason has been that they know they will lose.”

He claimed, in his speech, that Banks are “mugging their customers and the OFT and the government are letting them get away with it”.

Concluding he added: “These penalty charges are crippling people on very low income.

“I believe they are clearly illegal and if there was any doubt about it the banks would have the courage to fight a single case in the courts - which they do not.

“Meanwhile, frankly the OFT has been limp, the banks are dodging the courts and the government is turning a blind eye.”

The OFT and some members of the financial community are encouraging consumers to fight for their money.  This money has bee appropriated illegally, through underhanded methods that break government regulations.

Gone are the days when a person with bad credit could not get their hands on loans and credit cards. These days, pretty much anyone can get a loan, and in many cases it is even easier to get a credit card. All you have to do is watch out for the terms they are offered on, and the amount that you are going to be charged before you take out the loan. What this means however is that you if you have a poor credit rating, then it is important that you look into the various options that are open to you.

Credit cards are very easy to get approved for. In fact there are even stories of homeless people being offered credit cards and being approved for them when they apply. However, credit cards are extremely expensive. And if you have a poor credit rating, they will be even more expensive. In fact, for credit cards that are geared towards people with bad credit ratings, the rates charged can often be in excess of twenty per cent or more. Therefore, if you think that having credit is only going to tempt you into using it, and you do not think you need the credit, then it is a good idea to steer clear of credit cards.

Personal loans are the other option, and even if you have a bad credit rating, you will still be charged a lot less interest on a personal loan. If you have trouble being approved for a loan, you may consider taking it out on a secured basis or finding someone to guarantee the loan for you. However, unless you have some sort of financial emergency, it is wise to steer clear of credit that you do not need.

The Office of Fair Trading criticised 17 firms for misleading advertising that did not spell out the full implications of IVAs, in a statement last week.There is concern that some firms are cohering sales people to promote IVAs to indebted adults so they can earn commissions that averages £6,500.

The Insolvency Practices Council (IPC) has reported on rogue practitioners who sell IVAs to benefits claimants.  These people rarely have any chance of meeting the required payments.  They will loose the IVA fee, and stack-up several hundreds of pounds in fees, before being forced into an inevitable bankruptcy.

Mervyn King, the Bank of England Governor, warns that the £1,200 billion debt mountain is a social problem.   Until now, many people are holding the belief that the debt is a personal problem, or limited to the lower-income sections of society.

This comes on the heels of reports that indicate the number of women bankrupts.

The accountancy firm Wilkins Kennedy, claims that the proportion of female bankrupts has risen from 32 per cent in 2000 to the current 44 per cent, and is expected to reach 50 per cent in 2009.

The firm has two classifications of women who claim bankruptcy.  Those who are overspending to sustain a lifestyle they cannot not afford, and those who suffer as single mothers or divorcees.

The CCCS reports that nearly half the people they recommend bankruptcy as a solution to their debt problems are single women. The average debt of this group is £30,293. Half of the CCCS clients blame the unexpected and emergencies for their debt problems. The most common problems are a relationship breakdown, illness and employment.

If you have a zero per cent credit card interest rate on purchases, then why not use it? There are few times in life that financial institutions are going to give you anything for free so you should make sure that you are in a position to make the most of it once the opportunity does arise. You can do this very simply if you have an interest free credit card and a regular savings account.

The trick is to use your credit card to make purchases, which you will not have to pay any interest on. You can then save the money that you would have used on purchasing these goods in a savings account and earn interest on the balance. For example, suppose that you have a credit card that offers you zero per cent on all purchases for twelve months, up to a limit of five thousand pounds. Now, a lot of people would simply keep this card in their wallet for a rainy day, comfortable knowing that if they need it, they will have access to a credit card.

However, what you immediately should do is start using this card to pay for everything, from you groceries, to your petrol, to your mortgage and even your household bills. You can even write yourself a few credit card cheques to rack up the full five thousand. What you should then do is put the five thousand that you would have had to spend on these items into your savings account for the twelve months. Assuming an interest rate of five per cent on your savings account, this would earn you two hundred and fifty pounds for doing absolutely nothing.

Despite the fact that Consumer watchdog groups have been warning consumers to be careful, this month will see thousands of UK consumers turning to debt management schemes that will, possibly, cost them everything in the end.

“We often see people that have taken out a consolidation loan,” Meg Van Rooyn, information officer for National Debtline, told BBC News Online in 2003.

“A major danger is that people tend to look at how much they borrow not how much they will pay back in total.”

Prior to this, in December 2001, the Office of Fair Trading (OFT) established guidelines for the debt management industry.

The OFT dictated that firms needed to conduct a thorough review of clients’ financial position, reveal their fees upfront, and not mislead consumers into thinking that repayment of their debts would improve their credit rating.

In 2003, The Consumers’ Association mystery shopped seven leading debt management firms, all failed the OFT test in one or more ways.

In one instance the charges that the management firm would impose were larger than the debt repayments.

With the introduction of IVAs, it became more difficult for consumers to find a responsible method of reducing their debts.  Many are paying exorbitant fees for a service that garnishes their money for five years, and still leaves them with no credit rating.

One word of caution is being whispered by debt consolidation and debt management firms in the UK, buyer beware.  They are warning consumers to take time to find a good firm.  Never be ‘sold’ by a fatherly or motherly salesperson who treats you like family.

Instead, the best way for consumers to avoid bankruptcy is to shop around, ask for advice, and take their time.

Liberal Democrat social exclusion spokesman Matthew Taylor claims that penalties imposed for bouncing cheques and direct debit payments over the taking accounts past their overdraft limit earned the six High Street banks £4.5 billion in 2006.

Mr Taylor addressed Westminster Hall in debate. He said:  “This is a major contributor to the UK debt crisis and to social exclusion.

After a movement by the Office of Fair Trading (OFT) last year, many people are fighting the banks. In most cases the banks backed down when threatened with court action.

“Most importantly of all, these bank penalty charges are more than inconvenient, more than unfair, they are illegal.”

“For all other items, the absolute maximum in this electronic age where it’s all done automatically through computer is £2.50.”

This is a case of UK banks profiteering from the current debt problems.  Currently,  the law allows banks to impose a penalty to cover the administrative costs incurred by bounced cheques, exceeding the overdraft limits, or the rejection of a direct-debit payment.

While the current fee averages £30, Mr Taylor believes “The absolute maximum it costs the bank in these cases is £4.50 for a bounced cheque.

With the government investing millions into solving the debt problem, it is only a matter of time before the OFT addresses this problem. Until then, consumers who are paying exorbitant fees are reminded that they are entitled to a refund, but they must initiate the action, the banks will not give up the money willingly.

Mr Taylor added: “They know it’s an illegal rip-off of trusting and often impoverished customers.

“They are mugging their customers and the Office of Fair Trading and the Government are letting them get away with it.”

A new study shows that Brits who want an alternative to high interest rates are turning to Social Lending over the internet.  The report states thatt 74 per cent of UK adults may consider getting a loan or lending through a social lending community.

While it is common for consumers to lend money between friends and family, it can be dangerous to use the Internet for Social Lending.

Social Lending over the Internet, is where people lend and borrow loans, side-stepping the banks, to get earn better loan rates or returns. While it looks like a fair deal on the surface, there are many red flags.

Social Lending is not like other social networking sites like LinkedIn, YouTube and MySpace.  Borrowers and lenders could find themselves in danger from fraudsters, credit consumer damage, and theft.

The study looked at a number of Social Lending players, and used Zopa, the online marketplace, as a case study. Zopa, set up by members of the team that launched Egg, has attracted 105,000 members in the UK.

James Alexander, co-founder and CEO of Zopa, believes that not only are people looking for a better financial deal, but also for a way to make their money human again.

“People are already seeing the benefits – for example, those lending at Zopa have since launch received about a 50% better rate of return on money they’ve lent out than if they’d left their money in the best savings accounts such as ING Direct or Egg.”

However, unlike ethical lenders who operate over the internet, working as brokers for their clients, Social networking is not traceable. It is as easy for an identity theft fraudster to walk off with money as it is for them to steal money from consumers and banks.  The difference is, there are regulations to protect money stolen from banks, bank clients, and financial institutes.  These safeguards are not in place to protect a UK consumer who lends to a foreign citizen, or to someone who has simply vanished.

There is also the problem of losing the money invested if the borrower declares bankruptcy.

The problem is not the level of debt carried by homeowners, or the fact that homeowners are carrying high levels of unsecured loans.  The crisis is caused by homeowners who opted for adjustable-rate loans and mortgages, and are now struggling to repay their loans.

On January 11, the Bank of England increased the interest rate by one quarter of a point, to 5.25 per cent. This came as a stunning blow to many cash-strapped consumers who have financial products with adjustable-rates.

The economy has been looking at the startling numbers of new homeowners and consumers with personal loans.  However, those consumers who have adjustable-rate personal loans and homeowner loans that were purchased before June 2006, are now struggling with the third, unexpected, interest rate hike in six months.

A quarter of a point sounds mild, but it has raised many homeowners’ yearly interest rate payments substantially.  This is the highest borrowers are paying since May 2001.  Many first-time homeowners who entered the housing market in 2001 have no reference, or experience, to prepare them for the current rate hike.

The Royal Institution of Chartered Surveyors (Rics) warns that repossessions may become widespread, reaching 50 a day, as soaring bills and rising homeowner loan repayments squeezed homeowners expendable income beyond their limits.

“We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession, and we know some people are taking on mortgages that stretch them to the absolute limit. Any increase in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability,” said Peter Tutton, policy officer at Citizens Advice.

Analysts are scrambling to accurately predict whether the US growth will remain supportive to the UK economy.  However, they agree that interest rates are slowing the US economy, a problem compounded by higher fuel prices and a weakening housing market.

The housing market is the driving force. Price increases decelerated sharply in past months. Housing starts and building permits fell 30 per cent on the year, while in tandem, the supply of unsold homes soared.

Dominic Rossi, head of global equities at Threadneedle Investments, believes this may have a “noticeable impact on overall economic activity”.

Han de Jong of ABN AMRO Asset Management argues that a US slowdown in 2007 will only have a muted impact on the global economy.

“So far, other parts of the global economy appear to be unaffected and they probably have a greater likelihood than in the past of continuing on a favourable growth path, despite the US weakness.”

De Jong expects the global to slow in 2007, but it will manage the US slowdown.

This is good news for UK consumers who are speculating on the current housing market as a tool for building wealth.  Consumers need to understand that, while the US economy is slow, it is still strong, and consumer confidence in the US is high.

A strong global economy is a necessary element in any wealth building plan. Economists are wise to remember that ‘not all’ UK consumers are worried about debt. Many are watching their portfolios grow, and establishing a strong asset-based-wealth portfolio.