Bad Credit Loans :: News

As Brits continue to struggle against the recession the cost of living is showing no sign of giving them a break. Many Brits are taking out bad credit loans – special loans that are offered to people who have been turned away by conventional lenders due to bad credit or other credit history problems – in order to get the cash they need to weather this vicious economic storm.

• New numbers have just been released by the Office for National Statistics and according to The Guardian they show that consumer prices are more than a full percentage point higher than the government’s own target.

• The inflation rate is so high, in fact, that taxpayers who pay the basic rate will need to earn interest of almost four percent just to keep up with the widespread price increases.

• Those who pay higher rates, meanwhile, can offset high inflation by earning at least 5.17 percent on their money. But that’s not easy to do because no major banks are currently paying more than 3.88 percent on deposits of one or two years.

• Until the situation reverses the average taxpayer is essentially going to automatically lose 2-3 percent on their savings every year, a condition that is normally a powerful signal that serious price inflation may soon cause a more hazardous condition known as deflation.

Deflation is a term used by economists to explain what happens when the growth of the economy slows down so much that there is no longer a financial incentive to invest in the future. The exact opposite of deflation occurs, for instance, during times of prosperity when investments continue to gain value over time. But when deflation becomes rampant prices may rise at the same time money loses it buying power, creating a frightening financial trap that is hard to escape.
Although deflation can be somewhat complicated to understand, a practical and simple example is that the money a person has will buy less next year than it does right now. Two years from now it will buy even less, so over time instead of growing in value a person’s assets gradually dwindle in value. That removes any motivation to invest or save for tomorrow, which drives the economy even deeper into the doldrums as businesses cut back on hiring and spending.

The average consumer is already having a difficult time paying the monthly bills and putting food on the table, and it is rare to find anyone who has enough money left over to put it into a savings account. But if the cost of living continues to outpace earnings or investment gains then the situation will go from bad to worse. Even those who are able to set aside some cash for emergencies or retirement planning will watch their buying power shrink, not grow, while it sits in those savings accounts or pension plans.

Right now there are an estimated 16 million people experiencing a pay freeze, and approximately 20 percent of the population is going deeper into dept each week just to raise enough cash to pay their basic overhead. Inflation is growing and threatening to trigger deflation, and the rise in petrol prices and the VAT are only making matters more discouraging.

For those reasons many UK residents are turning to so-called bad credit loans as an alternative source of funds. These loans are tailored to the needs of people who already have a damaged credit history or a low credit score, so it is much easier to qualify for them than it is to get a loan at a traditional bank.