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Nearly half of UK consumers make use of some form of non-traditional borrowing, but if you don’t keep up with repayments the debt can quickly mount up.
Do you find that keeping up with all the repayments for your non-traditional borrowing is becoming a struggle?
If so then you’re not the only one. And if you’re wondering what a non-traditional debt is, it could be:
• Using a catalogue or online account to shop on credit
• Paying for furniture or other items in weekly or monthly instalments
• Store cards
• Hire Purchase Agreements (on a car, for instance)
• Buy now, pay later’ deals, where you take home the item but don’t pay for it until a later date
• Doorstep loans, or loans delivered to your home address
• Credit union loans
As you can see, there are more forms of credit available than you may have first thought. And research* conducted on our behalf recently revealed that nearly half (45.4%) of UK consumers have some form of non-traditional credit to their name.
It’s fair to say that sometimes we don’t even think of some of these forms of credit as debts. For instance, you might not think paying off your store card is as much of a priority as paying your credit card bill … perhaps because you haven’t borrowed that much on it.
However, the problem with this sort of credit is that the interest attached to it is likely to be far higher than on traditional forms of credit. And because you’re just spending small amounts at a time … buying a new outfit here or a kitchen appliance there … it’s easy to miss how quickly these debts mount up. Add the high interest to the amount you have left to pay and before you know it you could have a sizable bill on your hands.
According to the findings of our questionnaire, of the one in three people who use store cards when they go shopping, more than a third are at least a month behind with their repayments. And this situation is even worse among the 30% of customers paying for furniture, home appliances or gadgets in weekly or monthly instalments, with more than two-fifths revealing they are a month or more behind with paying off the debt.
Not keeping up with repayments can mean it takes you longer to clear the debt and that you end up paying more interest. However, there are more serious consequences. If you miss more than a couple of payments, your lenders could start getting in touch more, the interest you’re charged might increase and your credit rating could be affected - making it harder to borrow in the future.
Asking for help
If this sounds like something that’s happening to you, the most important thing to do is not ignore the problem. If you do, then the debt … and your lenders’ demands … will simply keep piling up until it feels completely unmanageable.
Rather than ignore the situation, speak to us. We can provide you with advice and support, and tell you what options are available to help you get your finances back on track.
This is not something you have to go through alone, so if you’re worried about your non-traditional debts, get in touch today and let’s see if we can help.