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Many people are now suffering the consequences of taking out loans and using credit cards when interest rates were as low as 3-5% - and many of these now require debt management solutions to help them cope with debt.

The Daily Telegraph quotes Hammond as saying:
"People feel in a sense that someone else is responsible for the decisions they made – of course, if banks don't offer credit, people can't take it.

"There were two consenting adults in all these transactions – a borrower and a lender – and they may both have made wrong calls.

"Some people are unwilling to accept responsibility for the consequences of their own choices."

Don’t shoot the borrower
Consumers buying goods or homeowners taking out large mortgages, who are now seeking debt management help, in most cases never envisaged credit card interest rates rocketing from around 5% to as much as 35% within 10 years. The average credit card interest rate is now 17-18%.

Mortgage rates have also risen recently – during the last decade 100% mortgages with no deposit were common, but 100% mortgages are now almost a thing of the past. First-time buyers are finding it hard to get on the property ladder and stay there – and many homeowners with outstanding loans and credit cards are being forced to seek debt advice.

Hammond’s assertion that the banks “had to lend to someone” appears to overlook New Labour’s rallying cry to consumers to support the high street retailer and help Britain spend its way out of recession.

If consumers now forced to seek debt advice were forewarned about the possibility of steep interest rate rises, they might well have been more circumspect, but the banking crisis was sudden and unexpected by many consumers.

"We allowed our expectations to run away with us," said Philip Hammond.

"We started living a lifestyle both in private consumption and in public consumption that we could not afford. We borrowed to top it up... now the day of reckoning has come and we are adjusting.

"Households were spending more than they earned – that's why household debt rose."

For many consumers whose expectations were raised by cheaper designer goods, holidays and homes – and who felt encouraged to spend by the "feelgood" factor engendered by the consumer bubble which grew under New Labour – the "adjusting" often ends in debt management.

In 2008, as the credit crisis hit, bank workers demanded that their jobs be protected under Gordon’s Brown’s £37 billion public spending package.

This week National Australia Bank announced another 1,400 redundancies by 2015 at Clydesdale and Yorkshire banks, which it owns – and every week more high street branches either close or suffer staff reductions in favour of automatic cash machines and online banking.

According to the British Bankers’ Association, in 2010 alone, Barclays, HBOS, Northern Rock, RBS, Santander and NatWest closed 187 high street branches.

Without consumers and new homeowners, Britain’s high streets and communities are in many cases dying – the fact that for years many were sustained by readily available, low-interest credit suggests that it is too late to shoot the borrower, who may now be paying the ultimate price of losing everything they have, unless a debt management solution can be found.


AUTHOR BIO:
The article is a courtesy by Eva Smith who represents Debt Local, a professional and friendly organization offering debt help and free debt advice to UK people to manage debt problems with best & favorable debt solutions. It has expert Debt Advisors who counsel and comfort clients with the commitment of confidentiality just like a personal financial consultant. Moreover People seeking debt advice have No Obligation to use the services.