This time of year often causes many financial problems for those individuals who have over spent during the Christmas period, running up large debts on personal loans, credit cards, overdrafts and pay day loans.

In a bid to try and help people get back on top of their loans and other debts in the New Year, the Co Operative bank has said that it will suspend all interest charges on agreed overdraft facilities for is existing customers for a period of three months.

Recent research from the bank found that the average level of loan and other debt in the UK increased by around 27 per cent over the course of last year, with the average person in the country increasing their debts by around £749.

The run up to Christmas usually sees many individuals increasing their loan and card debts, which in many cases they struggle to pay once the January bill arrive on the doorstep. The Co Operative has described the move to suspend overdraft interest on its accounts as a way of providing some extra financial relief for families, while they sort out their finances after the festive season.

More than half of the adult population relied on credit cards over the Christmas period, whilst a further 20 per cent took out a personal loan to help pay for it and 16 per cent used their overdraft facility an although most people aim to repay these debts quickly, the average time to clear Christmas debts is around 12 months.

A typical customer with the Co Operative bank who has an overdraft of £2,000, could save around £75 in interest payments over the course of the next three months under the scheme. The scheme is only available to existing customers who already have an agreed overdraft facility with the bank and will end on 4th April this year.

Credit unions have been around for many years in the UK and offer a home for people’s savings and the option of a cheap loan, as an alternative to a more traditional bank loan or an expensive pay day loan for those who are unable to access prime loan rates.

Although credit unions offer good savings returns and cheap loan rates, up until now they have been restricted to members who all have something in common, for example, living in the same area, working for the same employer, or belonging to the same organisation or club.

As from the 8th January this year, the rules governing credit unions are to be relaxed so that more individuals are able to access their services, wherever they live or work. Businesses and community groups will also be able to join a credit union and receive interest on their savings, as well as have access to cheap loan and finance rates.

Following the credit crunch, many people are unable to obtain the loan they require from a bank due to tighter lending rules and as a result, many are turning to expensive forms of finance such as pay day loans or even worse, loan sharks.

The rule changes reflect the government’s plans to allow more individuals better access to alternative forms of loans and finance, which should help many individuals avoid the spiral of uncontrollable loan debt which often comes from expensive credit.

Mark Lyonette of the Association of British Credit Unions Limited (ABCUL) said “These changes are a major breakthrough in the delivery of credit union services to communities around Britain. The new rules mean that credit unions can now compete more effectively with banks and other lenders to provide fair and affordable financial services.”

Have you made your New Year’s resolution yet this year? If so, you are one of around 26 million individuals in the UK who have done so (and some will have already broken them!).

With many people facing money worries at the moment and struggling to stay on top of their various personal loans and other debts, one of the most popular resolutions this year has been for individuals to sort out their personal finances and loans.

A new survey by the price comparison site Gocompare.com, has found that somewhere in the region of 49 per cent of those who have made a resolution this year have said that they want to sort out their finances, with many vowing to reduce their personal loans and credit card debts over the next twelve months.

This is the first time since the credit crunch hit the UK that financial affairs and personal loan reduction have been the most popular New Year’s resolution, beating losing weight and getting fit, which are normally the most popular choice.

Of those who made financial resolutions, the most popular areas were: to reduce monthly outgoings, paying off loan and credit card debt, making regular monthly savings and investing into the stock market and pension plans.

Although many of these individuals may have good intentions, the odds are against them succeeding. Typically, 86 per cent of New Year’s resolutions will have been broken within the first six months of the year and 41 per cent will have been broken by the end of January.

For those who are looking to save money this year and reduce their loans and other debts, the first thing to do is to shop around the market place for a better deal on things like insurance, personal cheap loan rates and zero per cent balance transfer credit cards.

There are many different types of loan and credit agreement across the UK, with different costs and charges, depending on the type of loan and the status of the borrower. However, it is often the poorer families in the UK who often end up paying a much higher price for their loans and credit than better off individuals.

A new report from the charity Barnado’s has found that many poorer families across the country end up spending around 30 per cent of their weekly income on repaying their personal loans and other debts.

The charity has described the loan industry as a whole as “morally bankrupt” and has accused lenders of exploiting vulnerable borrowers with expensive forms of loans and other credit, which they are realistically unable to afford.

Due to the fact that many lower income families are unable to access more traditional forms of lending such as bank loans, or other cheap loan options, many are forced to take out expensive pay day loans, or use rent to own schemes from companies such as BrightHouse in order to purchase the things they require.

The charity found that someone could buy a fridge freezer on a rent to own scheme for which they would end up paying £1,074 over a three year loan term. However, the same item is on sale on the high street for just £430.

Barnado’s has called on the government to do more to help low income families gain access to better cheap loan products, so that they may avoid pay day loans and other expensive credit and force rent to own schemes to show a clearer overall price which someone would pay for goods.

Anne Marie Carrie of Barnado’s said “The most vulnerable families in society are being lured into an unaffordable debt trap by a morally bankrupt lending industry.”

A large number of people in the UK are facing the problem of unmanageable personal loan and credit card debts and although many will claim that this is due to the current economic situation in the country, or job loss, the main reason for many individuals is due to the fact that they have taken loans out irresponsibly in the past.

The problem of mounting personal loan debts is particularly prevalent amongst younger people between the ages of 18 and 24. Once these people get themselves into loan debt, it is particularly hard to get themselves out of it and debt becomes the norm for many.

A new report from the All Party Parliamentary Group (APPG) has suggested that the problem of bad loan debts and irresponsible borrowing could be solved in the future, by introducing financial education into schools.

By teaching children of school age about things like personal loans and credit cards, as well as home owner loans, mortgages and different types of savings plan, it is believed that it would be possible for many individuals to avoid the problems of unmanageable loan debts in their future lives.

The report has suggested that finance education is introduced as a compulsory subject for children as early as primary school, for basic money skills, with this being developed during their secondary education to include knowledge of how a personal loan or a credit card works and how interest is calculated on debts.

Andrew Percy of the APPG said “We believe that financial education is a long term solution to the national problem of irresponsible borrowing and personal insolvency. Furthermore, teaching people about budgeting and personal finance will help equip the workforce with the necessary skills to succeed in business and drive forward economic growth.”