We're not all as lucky as the Meadows

Will lenders have to stop charging extortionate rates of interest on loans? This is the question many will be wondering this weekend after a judge last week wiped out a couple's £384,000 debt, which had risen from a £5,750 loan. Tony and Michelle Meadows took out the loan 15 years ago to install central heating. But the rate of interest was 34.9 per cent and they missed some repayments, which meant it racked up.

Will lenders have to stop charging extortionate rates of interest on loans? This is the question many will be wondering this weekend after a judge last week wiped out a couple's £384,000 debt, which had risen from a £5,750 loan. Tony and Michelle Meadows took out the loan 15 years ago to install central heating. But the rate of interest was 34.9 per cent and they missed some repayments, which meant it racked up.

However, while the intervention of the courts means the couple have avoided losing their home, not all of us can rely on a judge to bail us out when we get into difficulty. That's why it's important not to take on debt you can't repay. And if you have done the figures and can afford the repayments, be sure you understand how much interest you are being charged, and how it is calculated.

If you are having trouble getting credit - like the Meadows - you won't have access to the best deals. That's why they ended up paying such a high rate. But if you are in such a situation, it's worth thinking twice about whether you should be taking on more debt. Talk to the Citizens Advice Bureau if you are struggling to repay debts and think that taking out a further loan would help. Usually, amassing more debt to clear what you owe only makes matters worse.

If you haven't got credit problems, there's plenty of attractive deals around. When taking out a new credit card, opt for a 0 per cent introductory offer, preferably one that's longer than six months. Sainsbury's Bank has launched a new card offering 0 per cent on introductory purchases for 12 months, along with 0.25 per cent cashback on purchases, plus discounts.

Amazon.co.uk has entered the credit card market, offering a MasterCard with HBOS. There is 0 per cent on purchases and balance transfers for six months rather than 12, before the rate reverts to 12.9 per cent. Amazon customers earn one point for every pound they spend online, and 0.5 points for every pound spent elsewhere. But, given that you need 1,500 points to get a £15 gift voucher to use towards online purchases, it's not much to shout about.

If you prefer the structure of a loan, Halifax has extended its 6.5 per cent rate on unsecured borrowing of £7,000 or more until the end of November.

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