Low-income households 'need mainstream credit'

22/01/2010

The lasting effects of the recession could force people on low incomes to risk increased debt.

People on low incomes who have been denied credit or loans through mainstream sources could risk accumulating debt through high-cost credit companies.

This is according to Rhian Beynon, head of policy and campaigns at Family Action.

Ms Beynon said: "The recession makes it vital that the government deals with the issue of financial exclusion and low incomes urgently.

"Low-income groups need to access mainstream banking and credit facilities and a more flexible social fund if they are not to be driven into the arms of the home credit companies."

She added that the recent spell of cold weather would increase pressures on low-income families due to rising fuel bills.

According to the latest government statistics, nearly one in five households is classed as living on a low income.

Kevin Still, director of EuroDebt said: "Low income households are easy prey for door step lenders and newly emerging trends like 'cash for gold', which have been criticised by Which? this week.

"Getting money and debt advice early is essential before the debt spiral gets totally out of control."

He added: "Pay day loans and short term finance are not designed for anything other than a very limited lending periods measured in days and weeks."

Tags; Income Worries and Debt,

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