Manage your borrowing

If you find that you have to borrow money to cover expenses then you need to start by controlling and safeguarding your income.  A good way of doing this is by opening a basic bank account and creating a budget plan.   This enables you to manage your finances appropriately.  

Use the budget calculator will help you check your income against outgoings to see what you would have left at the end of each month to repay borrowings. If you find that your spending exceeds or is close to your income already, think very carefully about whether you really can afford to borrow more.

Also bear in mind that paying back loans and credit cards may become a problem if, for example, interest rates go up or you lose your job. The Money Advice Service interactive debt test will help you check whether you have - or are likely to have - problems with borrowing.

If however you do need to borrow money then consider the options as some forms of borrowing are more expensive than others.  Shop around to compare what it available and be aware of the different interest rates (APR) they are charging.  

Different type of borrowing include: 

• Overdrafts
• Bank loans
• Credit cards

If you regularly miss repayments and don't talk to your lender about your circumstances, your bank could take you to court for non-payment and get a County Court Judgment (CCJ) against you. This will count against you if you apply for credit in any form for the next six years.

Many lenders, such as banks and credit card companies, have agreed with the government to give borrowers 30 days ‘breathing space’ to deal with their debts.

You must seek advice from a free advice agency first such as Citizens Advice. You then need to write to your creditors and ask them to hold action for 30 days under the breathing space commitment.