On January 11 2020 the Money and Pensions Service (MAPS) highlighted just how many people are seeking debt advice. It said that, by the end of the month, it expected to have received 3,500 debt-related calls. Based on the Service’s helpline being open for 230 hours during the month, this equates to one call every four minutes. A credit card bill that includes the cost of Christmas is unlikely to be a welcome sight, especially if that bill arrives before the first payday of the year.
Generally speaking, Monday is the busiest day of the week on the MAPS helpline, and the Service says it expected to receive the most calls on January 20.
MAPS suggests that it is now receiving more calls than previously because of a recent change in the regulations. Banks and credit card providers are now required to warn customers if more than 50% of their repayments are going towards paying interest, fees and charges; i.e. if less than 50% of their repayments are being used to reduce the capital balance. The Service thinks it is now receiving more calls from consumers who receive these communications.
In addition to the 3,500 calls, January 2019 saw 26,000 people visited the debt advice locator tool on the MAPS website. The organisation has recruited new staff to handle the expected deluge and says the number of people employed on its helpline has risen by 20%.
MAPS says that nine million adults in the UK meet its definition of being ‘over-indebted’, i.e. their debts are a significant burden and/or they are regularly in arrears with payments. It adds that only one-third of those who are over-indebted are receiving debt advice, but that where people do seek advice, 64% have reduced their debt levels within six months.
Caroline Siarkiewicz, acting chief executive of MAPS, said:
“We know what a difficult time of year this can be for families who are worried about the bills piling up. It can be tempting to avoid confronting money worries after an expensive Christmas but the sooner you act, the easier it will be. Debt advice works. You can speak to the Money Advice Service for free, confidential help, connecting you with expert debt advice in your area.”
In an interview with the Wake Up To Money programme on BBC Radio Five Live, Ms Siarkiewicz added that she was particularly concerned by buy now, pay later schemes (offered by many retailers) and how some people were not aware that falling behind with payments on these arrangements can affect access to borrowing in subsequent years. On this subject, Ms Siarkiewicz commented:
“These schemes attract younger people and are pretty straightforward. [However] many do not understand borrowing in this way. It is great if you pay it off quickly. But many are not thinking about the future enough before they sign up to take out these products.”
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