People will take on expensive loans
(04 February 2008)

Banks tightening on lending may mean that more people take on riskier loans this year, rather than reduce their debts.

An expert at Moneywise has said that if people are turned down on cheaper forms of debt then they are likely to choose more expensive ones rather than make cut backs.

Rachel Lacey, editor at Moneywise, said: "It's the cheaper methods of credit that are going to be harder to get your hands on. So I think the worry is that people will take on more expensive types of debt because they need the credit."

She said that if people's credit card limits are restricted then they are more likely to use their overdraft and get a £30 charge each time.

A recent uSwitch report has suggested that four in ten people are being turned down for credit cards and one in five is denied a personal loan, said Ms Lacey.

Ms Lacey went on to say that the stricter lending will be a shock to our 'buy now pay later' lifestyle and predicted that it would change over the coming year.