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Families Need £1,800 Extra A Year By 2015 To Pay Credit Cards

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http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/8262896/Families-need-1800-extra-a-year-by-2015-to-pay-credit-cards.html

Households will need to find an extra £1,800 a year by 2015 just to pay the interest on their credit cards and other loans as interest rates rise, a report has suggested.

Interest rates on credit cards and loans are expected to increase by between 2 percentage and 3 percentage points in the coming four years meaning the average household will have to divert a significant chunk of their disposable income to paying their debt, accountants PricewaterhouseCoopers (PWC) said yesterday.

The report comes just a few days after many economists predicted that the Bank of England would be forced to start increasing interest rates in the first half of this year, much earlier than originally expected.

Their warnings came after surprisingly high so-called factory gate inflation figures – the prices that manufacturers pay for their raw materials shot up because of the rising oil and commodity prices.

Traders in the Government bond market are pricing in a rate rise by June, ending nearly two years of stability, during which time the Bank of England has kept rates at the record low of 0.5 per cent.

An increase in interest rates would not only hit the 30 million credit card users in Britain but also the eight million home owners on variable rate mortgages.

Though the typical household reduced its unsecured borrowing by £500 in 2010, as families tightened their belts and tried to pay down debts, the average household still owes around £8,000 on credit cards and loans.

PWC has calculated that the increase in credit card rates – which have steadily climbed despite the record Bank Rate – would mean families would have to find an extra £1,800 a year just to pay off the interest.

This extra burden on consumers could have a serious effect on the economy, the report warned.

Richard Thompson, partner at PwC, said: "Consumers will find it hard to absorb such large increases in debt interest payments without cutting back on spending.

"Given the historical significance of debt fuelled consumption to the UK economy, this prolonged contraction may impede retail sales and could be a drag on economic growth."

Clearly what's needed is more cheap debt to keep our debt fuelled super economy going.

Taxes increasing, the price of food / fuel increasing, cost of debt servicing increasing. All good news for aggregate demand.

The recovery is just going to get stronger and stronger.

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Another major accountancy firm trying to depict an increase in interest rates as hell on earth.

Their customers such as banks and big business are making fortunes from these low rates.

Bank margins high. Money going into shares because interest rates are low is feeding salary excesses of FTSE bosses because their bonuses are tied to share prices.

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Clearly what's needed is more cheap debt to keep our debt fuelled super economy going.

Taxes increasing, the price of food / fuel increasing, cost of debt servicing increasing. All good news for aggregate demand.

The recovery is just going to get stronger and stronger.

Exactly, if it's good for the government then it's good for the individual... Perpetual debt is the new way forward...

"I place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt." --Thomas Jefferson, third US president, architect and author (1743-1826)

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When you buy with debt you are paying more than you need to....paying with high interest debt you are actively creating your own personal inflation on top natural inflation you have no control over.

Debt is good only if you buy the right thing, at the right price, at the right rate of interest, over the right period of time. ;)

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When you buy with debt you are paying more than you need to....paying with high interest debt you are actively creating your own personal inflation on top natural inflation you have no control over.

Debt is good only if you buy the right thing, at the right price, at the right rate of interest, over the right period of time. ;)

I would add and also pay it off.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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