MONEY COMMENT
What To Do...When Debts Go Bad

By Cliff D'Arcy
June 6, 2003

Banking is a hugely profitable business. The UK's four biggest banks make well over £10 billion a year between them – I wonder how? However, if you think your bank is fleecing you, spare a thought for the estimated 7.8 million people who can't get access to mainstream credit. Many low-income families are forced to borrow at sky-high interest rates in order to make ends meet.

Outside of conventional lending, some lenders charge up to a mind-blowing 500% APR for small loans (and I thought 30% APR on a store card was pricey)! Debt On Our Doorstep, an alliance of consumer organisations, is demanding that the government acts. It wants to end the exploitation of the "financially excluded" through the introduction of a cap on the interest rates charged by impaired-credit lenders and doorstep moneylenders.

Obviously, these vulnerable borrowers are desperate and often end up victims of dodgy sales tactics, harassment and even violence. So, if you're finding your debts a worry, here are some tips on confronting your credit:

Get your financial priorities right

There's no point in investing or saving until you've learned how to budget properly and shrink expensive debts. You should always claim all the benefits you can. Also, you need to protect yourself and your belongings, especially if you're supporting a family. If you're out of work, read how to deal with unemployment.  

Let the Fool and its users help you

Visit our Get Out Of Debt centre for more helpful advice, and our Dealing With Debt discussion board for support and encouragement from fellow Fools.

Finally, although debt may be getting you down, remember that your first positive step will help you turn the corner...