Latest news

New agreements should help people stay out of debt

Banks and retailers have just agreed to some measures which should help people stay out of debt - and should increase competition in the banking world.

First of all, overdrafts. As of March 2012, people will be able to get alerts from their bank when their balance is low, helping them avoid going over their limit in the first place.

As of March 2013, they'll benefit from another change: they won't be charged if they do go over their limit by a small amount.

In September 2013, we should see the introduction of a guaranteed seven-day switching service, meaning customers will be able to switch to a new account quickly and without hassle. By making it easier to move to a new bank, this should promote competition and encourage the banks to focus on providing good service.

When it comes to shopping, retailers have agreed to change the way they handle store cards. Among other things, they've agreed to stop offering discounts on purchases at the time people actually take out a store card - something which has been seen as encouraging them to get into debt.

However, the Government isn't going to introduce a cap on interest rates on credit and store cards - something they had been considering - since research shows that some people could be 'priced out of the market' and end up taking out unregulated / high-cost credit.

"It's good to see voluntary agreements like this," said a spokesperson for the IVA Advisory Centre. "By giving people better control of their finances - and a bit more 'leeway' when it comes to overdraft charges - changes like these could really help people stay out of debt."