Consolidation loans could help stretched household budgets

Wed, 29 Mar 2006

A consolidation loan could help out homeowners struggling with their finances, as household bills reach levels unheard of since 1989.

Water bills are set rise as of April 1st and will take the average household water bill to £294 a year, marking an increase of approximately 5.5 per cent since last year.

According to Tim Wolfeden from the financial products comparison website uSwitch, this increase will see many households having to shell out almost £100 a month to cover basics such as heating, light and water.

This could have a serious impact on householders already struggling with credit card debts and personal loan repayments.

Mr Wolfeden suggests that some households could improve their budget management and ensure they don't struggle to pay their water bills by switching to a metered supply so they pay only for what they use.

A consolidation loan is another possible option for householders juggling with too many outgoings such as bills and personal loan repayments.

A consolidation loan could help spread payments on debt, however Ian Barber from the loan provider First Plus warns that consumers should carefully consider the pros and cons of taking out a consolidation loan.

He said that it is " a case of swings and roundabouts" with consolidation loans.

"The advantage is that you can reduce your monthly repayment, but the payments will be made for a longer period," he added.

For householders really struggling to pay off credit cards as well cover bills, writing up a budget and seeking help from a financial advisor could help, advises the National Debtline.

"The first stage is to do a personal budget listing your income and all essential outgoings to keep the roof over your head," a spokesperson said.

"This includes mortgage, rent, fuel, council tax, water, phone, housekeeping, travel," they added.



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