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Banks have increased their onslaught of credit card customers to offset losses due to increases in bad debts and the cap on overdraft fees.

“The tactics used include the magically appearing annual membership fees, charges for pseudo-cash products such as credit-card cheques, and hidden catches in balance-transfer deals.

The banks have been playing a sleight-of-hand game with their consumers for years. Now it has stepped up to levels that catch most consumers off-balance. In fact, many consumers build up hundreds of pounds of ‘hidden’ charges before they catch onto the bank’s ploy.

One of the biggest tricks is the five pound scheme. The credit card has no minimum balance each month.  Instead of a minimum monthly repayment the customer pays the monthly interest, plus premiums for payment protection insurance, plus fees, plus £5. However, this means that the average person never actually repays any of the capital from one year to the next.

Another scheme pays of the least expensive debt first.  The more expensive debts accrue more interest for longer periods – and of course, the interest is often calculated on the full total of the purchase until paid in full.  This means that all the small purchases are repaid quickly, leaving the large payments languishing on the card for months, or years.

Credit card, and most unsecured loan debts, have higher interest rates than personal loans.  Some unsecured loan debts are currently as high as 25%, and expected to increase at least one more time this year.

Consolidating bills is not an easy task, especially if you have a lot of debt.  The more debt you have the harder you may find it to obtain a debt consolidation loan at a low interest rate.  If you are not careful when selecting a consolidation loan, you could end up deeper in debt.

As you are searching for a consolidation loan, you must make it your goal to search for a loan that will lower your overall costs.  To accomplish that, you will want to find the lowest interest rate possible and have a plan to pay off your debt in three to five years.

Using credit cards to consolidate your debt is one type of loan that you can use if you do not have a large amount of debt.  Consolidating your debt on a credit card will require you to find a card with enough credit limits to cover the entire amount of the debt.  If you take out a personal loan for less than £2,000 you may find that the interest rate will be higher than if you take out a larger amount.  So if you require a loan less than £2,000, you may want to consider a credit card, because if you have a good credit rating, it will be likely that with a credit card you will be able to find a low interest rate, or a 0% introductory interest rate.

Another way to consolidate your loans is through a traditional debt consolidation loan.  A consolidation loan is sometimes an unsecured personal loan that does not require any security and is considered a risky loan to lenders and are usually more expensive and not easy to get if you have a lot of debt.  A secured personal loan will require you to provide collateral, such as your home, which can prove risky to you if you are not sure if you will be able to meet the monthly repayments.

You could also seek credit counselling or debt settlement, where you will have the assistance from agencies that will negotiate with your lenders to lower your monthly payments.  They will also help you to build a budget and come up with a financial plan to help clear your debt.  However, these services come at a cost, although there are agencies that do not charge you, you will end up paying with a bad mark on your credit rating.

“The government is looking tired and stale, and Brown has been tarnished by that,” said Peter Kellner, chairman of YouGov Plc, a polling company. “On its own, the budget won’t be enough to turn around Brown’s fortunes. It will be part of a bigger process to win back support.”

Debt reduction has not been a main priority for Britain’s budget since 2003. Brown expects a deficit of 2.8 percent next year.

“He doesn’t have much room to maneuver,” George Bull, of tax at Baker Tilly Financial Services in London, said. “He should take measures to boost competitiveness, but he doesn’t have the money to finance a cut in tax.”

“The rise in public spending as a share of GDP in the last five years has been striking,” Brian Coulton, an analyst at Fitch Ratings Inc., said in a note to clients. “It has been sharper than the previous episodes of rapid growth over 1980-83 and 1989-1993, both of which encompassed two major recessions.”

Most consumers are unable to fathom the limits of government debt.  However, the more loans the government carries, the more burden is put on the average consumers.  Many consumers are hoping for tax breaks.

Consumers are rarely interested in the budget, beyond learning whether it will offer financial relief.  Tax relief increases consumer’s ability to repay their own personal loans, or secure future loans.

Consumers are frustrated at the government’s attempts to curb their own spending through increased taxes on loans, while increasing the national debt through their own spending.

The types of mortgages available in the UK have changed, forever.  Now, 8 out of 10 UK homeowner loans have terms exceeding 25 years.

Two decades ago, the longest repayment term was 25-years. According to a report published by Moneyfacts.co.uk, one in four UK mortgage lenders now offer repayment terms spread that exceed 40 years, and 8 out of 10 lenders offer maximum mortgage repayment terms that exceed the traditional 25 year limits.

Julia Harris, analysts at Moneyfacts.co.uk, said that consumers needed to give careful consideration to both the size of the mortgage and the repayment term.

Harris said: “A mortgage for most of us will represent the largest and longest financial commitment of our lives. For many years the standard term considered for a mortgage in the UK was 25 years, but as affordability becomes increasingly difficult for many of today’s first time buyers, a 25-year term is perhaps no longer considered sufficient.”

Ms. Harris stresses that many UK homeowner loan lenders have enticed the young to buy by extending the mortgage term and increasing the income multiples, which increase the amount consumers can borrow.

“It’s a frightening thought to think you could potentially be forking out for that hefty monthly mortgage payment from the moment you turn 18 until the day you retire at 70.”

Debt experts warn UK consumers that homeowner loans that exceed 40 years are dangerous.

A spokesperson for the debt charity Credit Action said: “People are left very susceptible to any sort of circumstantial change” if they agreed to long-term repayment periods.

Are you are feeling weighed down by the debt on your credit cards and wondering how you will ever be able to pay off the debt with the amount of interest that you are currently paying on your card?  Maybe a credit card offering a 0% interest rate on balance transfers may interest you.

The way a balance transfer works, is when you find that the balances on your credit cards are becoming harder to pay off. Maybe the current interest rate you are paying on your card is too high so you want to start searching for a lower interest rate.  As many credit card companies offer a 0% interest rate for an introductory period you will easily find a credit card that you will be able to transfer your current balances over to.  If your application has been accepted and you receive the 0% interest rate credit card, you will then want to immediately phone your original credit card company to have the balance transferred.

When you phone the credit card company, you will want to have information on your current credit cards on hand, as you will be required to give the new card company information such as the amounts that are to be transferred, the name of the credit card company and the account number.  The credit card company will then phone the other credit card company to have the amount paid off and the balance will then be added to your new 0% interest rate card.

As you are searching for a credit card that is offering a 0% interest rate, you will want to first search for a card that offers the longest introductory period, which is typically 3-6 months, but there are some companies that offer 12 months; the longer the better.  If the card has a long introductory offer of 0%, you will then want to find out what the typical APR will be once the introductory offer is over, as you could end up paying the interest rate on the balance if it is not paid off by the end of the offer.  You will also want to find a card that charges little on the balance transfer handling fee, or has a cap on the amount that is charged.  Although it may be hard to find a card with all three benefits, if you search hard you will find a card that is right for you.

Debt statistics are updated monthly.  Government, banks, and loan firms use these numbers to determine how they do business.  Consumers can use these numbers to differentiate between ad copy - meant to sell products - and a real look at the UK economy

The total UK personal debt exceeded £1.25 trillion.  At the end of January 2007 it stood at £1,300bn. The growth rate increased to 10.5 per cent for the previous 12 months, or an increase of £114bn.

Total secured loan lending exceeded £1 trillion (£1,000 billion) and at the end of January 2007 it stood at £1087bn, an 11.5 per cent increase over the last 12 months.

The average household debt in the UK is £8,795 (excluding mortgages) and £53,701 including mortgages.  This is far less than IVA and debt management firms are claiming.  These numbers bring the supposed ‘debt mountain’ to a more manageable ‘hill’ – and corroborates the Bank of England’s numbers.

Average owed on loans by every UK adult is £27,638 (including mortgages). This grew by £200 in February 2007.

The average interest paid by each household this year is approximately £3,425 each year.

The average unsecured consumer borrowing via credit cards, motor and retail finance deals, overdraft loans and unsecured personal loans rose to £4,526 per UK adult at the end of January 2007.

Britain’s personal debt is increasing by £1 million every 4 minutes.

This paints a strong picture of the average UK consumer’s ability to manage their debt.  While many households are struggling under debt, many analysts believe that a good debt management councillor will serve most UK consumers better than an IVA firm.

If you are looking to get a loan, your credit history can have a big effect on the outcome of the loan.  If you have bad credit you will have to expect a higher interest rate, or you may be required to take out a secured loan.  That is why many people strive to build a good credit history.  Although building a good credit history may be hard for some, with time, discipline and hard work you will be able to build a good credit history.

To start rebuilding your credit history you will need to develop a budget and live by it.  Through a budget you will be able to know how much money is coming in every month and how much you are spending.  By listing all your income sources against your expenses you will be able to know how much you will be able to afford should you take out a loan.  You should never take on a loan that you are unable to comfortably afford.

Budgeting will help you keep track of your expenses and allow you to maintain better control on your finances.  Other things to consider to ensure your credit report will reflect a good credit history is to pay your bills on time and to pay them in full.  This includes your credit cards, store cards, or utility bills.  You will also want to review your credit report annually to ensure that there are no errors or suspicious activity.  If you find that there are errors on your report then you will want to take the necessary steps to remove them from your report.

The trickle effect has finally hit the UK economy as consumers tighten their belts after four, almost successive, interest rate hikes. However, analysts are still reminding consumers that the interest rate has not hit the ‘breaking’ point of 6 per cent, nor has it hit the levels it did a decade ago.

Despite high spending in the retail sector last January, there are now reports which indicate that consumers are not spending as heavily as they once did.

Nationwide’s Consumer Confidence index is slightly higher than last month, as reported in Reuters.

“The index seems to be showing that consumers are responding to the three increases in interest rates. All of the indices are well below the levels recorded before the first rise in rates,” said Nationwide chief economist Fionnuala Earley, reports Reuters.

“Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed which suggest a fairly stable economic background,” she added.

However, there is good news for consumers who are trying to reduce their debt.  The Bank of England increased the interest rate in an attempt to lower the inflation rate.  While the interest rate impacts the economy, short term, a high inflation rate would create problems for years to come.

This leaves consumers who are trying to build wealth a window of opportunity to take advantage of the buy-to-let or residential housing market.

This is a good time to start a new business in many sectors except retail.  It is still relatively easy to apply for a secured loan that can be used to set up a business.

If you are searching for a mortgage that is suitable for you and your needs, there is one type of mortgage that you may want to consider, a discount mortgage.  A discount mortgage is a mortgage with an interest rate where a discount is applied to the rate on the loan.  The discount is applied to the lender’s standard variable rate for a set length of time.  The length of time can vary from three months to several years.  Because it is a variable rate, the interest will rise and fall with the Bank of England’s base rate.  As the standard variable rate fluctuates up and down, so will the discounted rate.  A lender will offer you various discounts on the interest rate of the mortgage.

A discount mortgage can be beneficial if you are purchasing a home for the first time, as you can use the money that you are saving with the discounted interest rate to purchase new furniture or to help you redecorate your home.  The longer the discounted rate period is, the more you will benefit, so it would be wise to ask around to ensure you receive the best rate as well as the best discount on the mortgage.

With discount mortgages, early redemption penalties almost always apply and could extend beyond the discounted period.  This means that you could end up tied into a mortgage with uncompetitive rates once the discount on the interest rate expires and it reverts back to the lender’s standard variable rate.  If you change your mortgage during the early redemption penalty period, you will have to pay a fee that can be as much as six months repayments on the mortgage.  It will pay off to search around and compare offers from various lenders.

The charity Consumer Credit Counselling Service (CCCS) advised 50,472 people between June and December 2006.  This is a 66% increase in the number of people with debt management problems that it helped  during the same period in 2005, to 30,450.

The CCCS said this is due to the fact that they are expanding the services they offer UK consumers. However, the charity also points out that single people in the UK as now the most vulnerable to debt related problems.

A Debt Counsellors survey claims that  22 per cent of married consumers do not tell their spouse about their debt problems,  and 27 per cent have kept debt problems a secret from the person they are living with.

There are several venues that believe many of the problems single people face are caused by their partner’s ‘hidden’ debts.  Many of these consumers may expect to separate assets when they divorce.  However, more and more, UK consumers are finding that their wealth is swallowed up by hidden debts, and that all the couple has to separate are debts.

This problem will only grow as recent figures suggest that 1 in 5 UK consumers are considering bankruptcy.  This translates to almost 9 million consumers who feel that their debts are so high they must declare bankruptcy.

However, the number of people who are having trouble repaying their debts has dropped by 7 per cent from last October.  The number of people who have problems paying their monthly debts and bills has dropped 40 per cent.