Secured loans could be less expensive than an overdraft
04/02/2008Overdrafts have been labelled as a "really, really expensive" method of borrowing due to the charges related to overspending.
According to Rachel Lacey, the editor of personal finance magazine Moneywise, people may start using their overdrafts more frequently as lending becomes tighter and credit cards become harder to obtain.
Because some banks charge up to £30 every time an overdraft limit is breached, it could end up being a costly way to borrow money, Ms Lacey said.
"I think that's where my concern would be. Or that people will end up with more expensive credit cards … if you're not paying those back every month then that starts to get really expensive."
Secured loans could be suitable for some consumers as they enable funds to be borrowed against a house.
They can give a more competitive rate of interest compared to more traiditional methods of borrowing.
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