Could loans help households weather the financial storm?

With British households still experiencing economic difficulties, the dominance of the credit card seems to be waning as more people are drawn to alternative forms of lending.

According to research by PricewaterhouseCoopers, the amount of money borrowed on credit cards and the number of cards used has fallen significantly over the past twelve months, demonstrating how this form of lending has lost consumer confidence and is in decline. This suggests UK consumers are choosing other methods of payment over the credit card, and loans are one alternative which has proven popular.

In particular, cash loans have grown in popularity by helping consumers obtain the funds needed to pay bills, car payments or other expenditures. These provide an easy cash advance to struggling Brits, aiming to restore their finances to a more manageable level - but could they help households weather the financial storm?

Credit cards versus loans

To determine whether loans can be used to weather the financial storm you must consider their suitability as a long-term form of money management.

Many lenders advise against using loans regularly but covering the odd repayment with these products could help establish a more secure financial situation for the future.

Many feel credit cards encourage consumers to spend money they do not have and this is thought to have contributed to their decline. This makes it easier to accumulate a large debt and regular credit card repayments can soon become another financial burden.

Loans can have a more simplified repayment structure and are taken on a single occasion, making recurrent overspending more difficult. Repayments can still be spread across a longer time frame but the temptation to regularly overspend is reduced.

Quick cash loans can provide borrowers with the cash they need to cover a range of expenses and could therefore help households weather the financial storm.

Money matters

The financial storm has been created by a number of different factors and, whilst expenses have risen, many people are expecting their pay to remain the same over the following year.

In fact, 65% of workers have already experienced stagnation in their pay since the economic difficulties began and 15% have not received a pay rise in at least three years. This means income levels are remaining relatively flat but unfortunately the same cannot be said for outgoings.

This is because inflation rates have not affected income levels and that means consumers are being asked to make the same amount of money stretch further.

This situation has led to the current economic difficulties faced by Brits, with many households struggling to cope with mounting debts and large bills.

Loans are used to provide consumers with the access to the cash they need, when they need it. The process is convenient and simple and some lenders even offer a home collection service for repayments.

Whilst other forms of lending have lost sway in the current climate, loans such as these have become more commonplace - perhaps reflecting their ability to help you control your finances.