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Start 2008 with a 'debt detox'

Date: 03/01/2008           Category: Community Safety

A joint campaign to urge local people to manage their money sensibly and avoid high interest rate charges has been launched by Citizens Advice and Medway Council’s Trading Standards team. They want people to make a new year’s resolution to keep out of financial difficulties in 2008 and have issued ten tips for sensible money management. The advice comes after a year in which Citizens Advice Medway helped almost 750 clients with debt problems amounting in total to a staggering £14,605,650. The total figure equates to an average debt for each client of just under £20,000. Almost two-thirds of the people asking for help were receiving a welfare benefit of some kind and 305 of them were unemployed. Between them these clients owed more than £5m on credit or store cards - an average of £4,100 per card - while almost a third were homeowners with average mortgage arrears of £8,300. While Citizens Advice deals with debt problems, the trading standards team at Medway is responsible for making sure companies are acting within the law when advertising their credit services. The team gets involved in cases of extortionate credit and takes action when creditors harass debtors for payment. The most common reasons given to Citizens Advice by people who had fallen into debt were: Having a disability or becoming disabled (23%), finances going out of control (20%), becoming unemployed (10%) and relationship breakdown (8%). Medway Council’s Portfolio Holder for Community Safety and Enforcement Cllr Rehman Chishti said: “The modern marketplace makes it easier than ever to access credit, but residents really should be careful. “We advise residents to resist the temptation of buying goods and services today and paying for them tomorrow. It’s always better to save some money for a rainy day and only borrow what you can afford to pay back.” And with the January sales still running, Cllr Chishti added: “Remember, a bargain is only a bargain if you need it.” Citizens Advice Medway Chief Executive Officer Peter Stokes added: “All too often we see people when they've already reached crisis point or can no longer cope with their problems, but by carrying out a regular financial overhaul and taking some preventative action people could avert many problems before they become crises. “People traditionally make new year’s resolutions to change bad habits and we're just urging people to do the same with their finances. Its never too late to get help but do so sooner rather than later as creditors will not go away.” Medway Council funds a dedicated debt helpline on 01634 380035. Alternatively people can email advice@medwaycab.cabnet.org.uk Here are ten tips from Trading Standards and Citizens Advice Medway designed to help stop that Christmas debt hangover turning into a nightmare. 1. If you need a loan make sure you shop around for the best deal before signing any agreement. In most cases, the lower the APR, the less you pay in interest, but make sure you find out whether or not there are other charges not included in the APR. 2. Be wary of consolidating your debts. Taking out a loan to pay off your other loans could mean you pay much more off in the long run. Make sure you understand the full costs before signing on the dotted line. 3. Don’t put your house up as security on a loan unless you are sure you can keep up the repayments. 4. Can you cancel your agreement? In most cases, you are only legally entitled to a ‘cooling-off’ period when you sign a credit agreement at home. And remember you may be charged interest if you settle early. 5. Check whether the interest rate is fixed or variable. Will it stay the same throughout the lifetime of the agreement or could it change. 6. Make sure you read through the terms and conditions of your agreement before you decide to take out a loan and be particularly aware of charges for paying it off early. 7. If you want to make lump sum payments or over-pay on occasions, make sure the loan allows you to make ‘capital repayments’. 8. If you see an offer for a low interest credit card transfer make sure you check through all the the terms and conditions. 9. Check out tax efficient ways to save money like cash ISAs. 10. Don’t automatically renew your car/holiday/house insurance without comparing your renewal quote with other companies. Some websites offer a range of price comparisons. ………………………………………………………………………………………….. Notes for Editor 1. The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information see www.citizensadvice.org.uk 2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. 3. Most Citizens Advice service staff are trained volunteers, working at around 3,200 service outlets across England and Wales. 4. Advice and information www.adviceguide.org.uk 5. Volunteer hotline on 01634 888191. 6. Citizens Advice also acts as the UK European Consumer Centre (ECC) providing advice and information helping consumers to resolve disputes within the European Union. Further information available on www.euroconsumer.org.uk 7. Further information can be obtained from Citizens Advice Medway’s CEO, Peter Stokes, on 01634 409715 or 07957 912108 or peteratmedwaycab@Aol.com. These are NOT for publication. 8. Medway CAB has bureaux at 46 Green Street, Gillingham and 5A New Road Avenue, Chatham. 9. Medway CAB’s telephone helpline is 0870 126 4095. 10. Medway CAB’s housing and the debtline number is 01634 380035. 11. Locally Medway CAB deals with around 25,000 enquiries a year.