Home > News > Debt advice

Government warns about rising credit card debt Debt - the 12-month view Amount of `bad debt` written off reaches 16-year high Deeper into debt: middle-class poverty Debt taken on by individuals increased in January Debt Relief Order (DRO) rules may be changed Overdrafts: five million Britons `permanently` in debt Mortgage lending drops to decade low The cost of debt falls Two thirds hope to have cleared mortgage debt by 50 40% of people approaching retirement `saddled with debt` Repossession `may be best` for homeowners struggling with debt Bankruptcies in Scotland - the worst may be yet to come Good news for people with energy debts US: new law provides debt-free date More debt taken on than repaid in December Savings rise as consumers pay down debt Household debt `could trigger another downturn` More families could fall into debt with energy companies Recession ends

Deflation ‘increases the debt burden’

28/11/2008

Deflation isn’t just bad for the economy, The Telegraph reports – it also increases the burden of debt.

When prices are shrinking, people tend to wait before making purchases. If something’s going to be cheaper tomorrow, why buy it today? This is clearly bad for the UK’s economy – and therefore its citizens – but deflation also has a more direct effect on people with debts.

Basically, inflation (the normal state of affairs) means money is worth less all the time; a pound today isn’t worth what it was back in 1980. Deflation, now acknowledged as a real possibility, has the opposite effect, which means people with debts will have to put more effort into paying off each pound of debt.

As The Telegraph puts it: ‘If all you do is service the debt – in other words, pay just the interest without paying off any of the principal – the amount owed will become 5pc more onerous each year.’

---

Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

Government warns about rising credit card debt 05/03/2010 - The latest figures from the Bank of England (BoE) have Debt - the 12-month view 04/03/2010 - In January, UK citizens - between them - borrowed £500 Amount of `bad debt` written off reaches 16-year high 03/03/2010 - The latest figures from the Bank of England (BoE) suggest Deeper into debt: middle-class poverty 02/03/2010 - The recession has also affected a lot of people with