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NEWS ALERT: Bank of England raises base rate to by .25 percentage points to 5.75%
The Bank of England's Monetary Policy Committee today voted to raise the official Bank Rate paid on commercial bank reserves by .25 percentage points to 5.75%.
Commenting on the rise and how it will particularly affect new graduates, James Falla, debt expert and MD of debt consultancy Thomas Charles (www.thomascharles.com), said:
“This rate rise could not come at a worse time for young graduates. At Thomas Charles, we are seeing many more graduates coming out of university saddled with debt. These generally include a loan from the Student Loans Company at around £9-12k, and personal debts, particularly student overdrafts and credit cards, which can also easily be up to £10k. This means that the average student has debt of £20k+ when they graduate.
Indebted graduates are then likely to go on borrowing; taking a graduate loan of up to £5k to tide them over the first few months of work, and growing their credit card balances. As such, just one year after leaving university, a graduate can easily have debts approaching £30k.
The fact that tuition fees only have to be repaid when a graduate is earning a certain amount sounds good on paper. However, with so many of our graduates already in financial difficulty, when you add the burden of tuition fee repayment, we are likely to see many more of our graduates in financial melt-down and this may have serious repercussions for the economy.
Surely we need our graduates to be concentrating on their careers and ultimately developing the economy, not racked with worry due to debt problems which will have a seriously negative impact on their performance at work.
On the bright side, however, now is a good time to go on the hunt for a great rate on your savings account. Increases in the base interest rate may not be so readily reflected by banks in savings rates as they are on your debts, but shopping around to find the best deal for you could make your savings work much harder.”
CONSUMER DEBT:
Top tips
- Don’t bury your head in the sand. Try working out your financial position using the debt-help-uk.org.uk ‘debt wizard’.
- Consider transferring credit card debt to a 0% card while you deal with more pressing bills, such as any council tax or mortgage payments. But don’t use this as an excuse to run up more debt elsewhere.
- Don’t take out other loans to pay off the original debt or use a consolidation loan. If you must do this, be disciplined and don’t use the new loan money for anything else.
- Talk to your creditors about structuring a realistic repayment plan.
- If you cannot do a repayment plan and you do not want to go bankrupt then try an IVA. Visit IVA.co.uk or call the IVA helpline (0800 197 48 38).
- If you want to consider bankruptcy then try the Citizens Advice Bureau (citizensadvice.org.uk)
- If mortgage rate rises are a problem, try working out how the interest rate rise will affect your mortgage using a rate rise calculator like the one on http://www.iva.co.uk/MortgageCalc.asp or http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml
Useful contacts
- Ends -
About Thomas Charles & Co Ltd
Thomas Charles & Co Ltd was set up in 2004. The Joint Managing Director, James Falla has 7 years experience in the insolvency and debt management industry and was involved in the set up of debt help specialists, Brookvale Group PLC, listed on OFEX since 2001.
Thomas Charles operates throughout England and Wales with its head office in Acton (West London). It has a personal, consultative approach to debt management. It focuses primarily on providing formal solutions for debt problems including Individual Voluntary Arrangement and Bankruptcy. However, it will also provide advice around informal debt repayment plans where appropriate. It works with third party Insolvency Practitioners around the UK.
About James Falla
James Falla has advised people who have personal debt problems since 1997. During this period he has helped 1000s of people through the IVA process and worked with many others who have decided to undertake both Bankruptcy and informal Debt Management Plans.
James co-founded Thomas Charles (www.thomascharles.com) with William Berry in 2004 with the objective of providing clear impartial advice and solutions for people in serious debt. James has made numerous TV and radio appearances, including BBC1 News, BBC News 24, and Wake Up To Money. |
