Brits learning lessons from economic slowdown

While the Bank of England's decision to make a drastic cut in the base rate of interest has been welcomed by almost all of the UK's struggling households, for many, though it is certainly a step in the right direction, times look set to remain tough for the foreseeable future.

Most at risk as a result of the global economic slowdown are those consumers who are almost wholly reliant on credit to get by, and, as the high street lenders move to tighten their belts so as to protect themselves from further bad debt, many Brits are now finding themselves shopping around for cash.

Indeed, according to Credit Action, those no longer able to get accepted for zero per cent credit cards or unsecured loans are now turning to high interest credit providers, such as pay day loans, logbook loans or even pawn brokers.

Though understanding of the harsh financial realities being faced by growing numbers of Brits, the charity's Francis Walker has nevertheless urged consumers to think twice before making any rash decisions, with any of the above options only likely to land them in greater economic trouble over the long-term.

"I am sympathetic if people are very desperate and just need cash and I understand why they turn to someone like a payday lender or something but people have got to understand that it is very expensive and if they are doing it they must only do it as a one off and not let it roll over," she advised.

"They should perhaps explore other things like credit unions for example which I know aren't available to everybody but the laws have changed on that so you don't necessarily have to have saved with a credit union in order to be able to access money so people should look around."

These comments come as the latest research by Abbey Credit Cards has revealed that the average amount of disposable income Brits are now left with at the end of the month has fallen by a massive 30 per cent over the past two years alone.

This is due largely to the fact that the average consumer is now required to spend 75 per cent of their income on essentials, such as paying a mortgage or rent, and meeting the rising cost of utilities bills.

Despite this, several other studies have suggested that the credit crunch may be helping to change the nation's attitude towards money and, while money matters may be tight right now, in the long-run, this could actually serve to help Brits come to appreciate the importance of spending and help turn back the clocks to a time when credit was an absolute last-resort rather than a quick financial fix.