BST borrowers will be able to take short-term loans from the bank in the future, as it plans to offer an alternative to payday lenders, loan sharks and overdrafts.
The bank has revealed that it is looking to launch a set of new, shorter-term personal loans to help those with cash flow issues.
It remains to be disclosed about the rates and terms for which people will be able to borrow or when exactly the new deals will be launched, but he says these will be targeted at working families and those with variable incomes.
The bank says it wants to fill the void where borrowers feel they have no other option but to take out more expensive types of credit.
It currently offers personal loans between £ 7,500 and £ 25,000 for those borrowing between one and five years at a competitive rate of 2.9%, which has been reduced this week by 3.2%.
It is therefore likely that its new line will be for loans of less than one year for amounts of less than £ 7,500.
How to get out of debt
A RECORD number of Britons are looking for help managing their debt.
While getting back on track may seem like a daunting task, we’ve looked at what you can do to help you along the way.
Get free help: There are many groups that can help you with your debts.
- Advice to citizens – 0808 800 9060
- Stage change – 0800 138 1111
- National debt – 0808 808 4000
Don’t ignore invoices: Ignoring your bills won’t make them go away, as tempting as it may be, and the problem is likely to get worse. It’s best to tackle debt head-on by figuring out exactly what you owe and when you owe it.
Make a budget: Once you know what to pay back, it will become easier to prioritize your finances. The next step is to create a detailed budget so that you can see how much input and output you have. Use an online tool like this from Advice to citizens to help you do that.
Switch and Save: Households can save hundreds of dollars by checking to see if they can get a cheaper deal elsewhere. In fact, MoneySavingExpert claims families can save £ 330 on average by switching from Standard Variable Tariffs (SVT) to a better rate. Use a comparison site like SilverSuperMarket Where Energy helpline to see what offers are available.
Get a balance transfer card: If you pay interest on your credit card balance, it can ultimately increase your debt. A better option might be to get a 0% balance transfer card. These types of cards will allow you to transfer an existing balance to a new card and give you the option of wiping it out entirely without incurring any interest. MoneySavingExpert Eligibility Calculator will tell you which offers you are likely to qualify for. You will need to have a good credit rating to benefit from it.
Check if you are entitled to benefits: It is important to check if you are entitled to additional benefits or tax credits if you are experiencing financial difficulties. Advice to citizens can help you see what help is available and there is a benefits calculator on the Gov.uk website. Assistance ranges from tax credits, jobseeker’s allowance and universal credit.
Also consider: You can find information on Debt Management Plans (DMPs) and Individual Voluntary Agreements (IVAs) on the site Financial Advisory Service Website and on the government Gov.uk website. But make sure you know exactly what you’re signing up for, as these plans aren’t for everyone. Many companies charge a fee for the service, whether it’s upfront or built into your monthly payments.
For current best buys under £ 7,500, Cahoot and Santander are offering the cheapest loan at a rate of 13.5% on a loan of £ 1,000 to £ 1,999.
Meanwhile, Ikano charges 13.4% on £ 2,000 to £ 2,999, and Admiral sets rates at 8.2% for £ 3,000 to £ 4,999.
Admiral is also the cheapest for loans between £ 5,000 and £ 7,499, with a rate of 3.4%, according to MoneySavingExpert.com.
Of course, the rate you get varies depending on how much you borrow and your credit history, and only 51% of applicants need to be offered the advertised rate.
So use an eligibility checker, such as MoneySavingExpert.com’s, to check your likelihood of being accepted first without affecting your credit score.
By comparison, short-term lender Amigo charges 49.9% on loans between £ 1,000 and £ 10,000 over 12-60 months, while payday lenders are known to charge over 1,000%.
If you only need a small amount of money in the short term, you might be better off getting an interest-free credit card as long as you are sure you can pay off the debt before the end of the term. 0%.
Of course, the problem is that often personal loans and credit cards can only be taken out by those with a decent credit rating, leaving others to turn to more expensive alternatives.
A spokesperson for the TSB said: “Customers have told us they want more help dealing with short-term cash flow issues, and they want a bank that offers better options for borrowing for shorter periods. .
“That’s why we recently reduced our overall rate on unsecured personal loans to 2.9% APR, and why we are offering one-month payment holidays to clients with personal loans.
“We are currently in the process of developing short-term loan products to better meet the needs of our clients. “
Short-term lender Amigo Loans goes up for sale – here’s what it means for borrowers.
During this time, banks have been warned to help clients with large overdrafts.
It comes as banks hike rates from April 6 to up to 49.9 percent.