Finance News

Catalogue Debt More of a Problem than Payday Loans

A charity warned today that more people are struggling with home shopping catalogue debts than they are with payday loans, mortgages or rent arrears.
The Money Advice Trust’s National Debtline received over 25,000 telephone calls from consumers worried about their debts with catalogue companies last year, which is the largest share of calls in the trust’s 25 year history.
The UK debt charity warned that people do not realise that using catalogues ties them into a consumer credit agreement with debts enforceable in courts.
The Money Advice Trust says that a lot of financially vulnerable households are easily tempted by buy now pay later options offered by the home shopping companies which let people pay for their items in instalments.
While there are often interest free options over very short periods of time often people take the longer, more affordable sized payment which unfortunately ties them into interest rates of up to 40% over long periods of time, sometimes up to nearly 2 years.
Money Advice Trust chief executive Joana Elson said: ‘Many people don’t realise that missing a payment on a catalogue debt will usually invalidate any special low or 0 per cent interest deal.’
‘Catalogue debts go largely unmentioned in public these days, but advisers at National Debtline hear from nearly 100 people every day struggling to repay such debts.
‘Many people might be surprised to hear we get more calls on catalogue debts than on things like mortgages, rent and payday loans.’
Customers are also charged hefty payments if they are late paying, with £12 charges common place for late payment fees, and even charges for letters and phone calls.
National Debtline has received over 7,000 calls from people struggling with catalogue debts in the first quarter of 2012. It urges people who are struggling financially to seek help and free independent advice and not ignore the problem.