With Christmas having just passed, many people will be seeking to consolidate their debt, not least if this has increased due to festive spending, so now may be a good time to look around for a loan.

Such a situation has been noted by Andrew Hagger of Moneyfacts.co.uk, who observed that some of the largest providers of personal unsecured lending have been trimming the cost of their larger loans.

He noted the leading six players in the market have dropped their rates by between 0.1 per cent and 2.4 per cent, with M&S Money offering the greatest reduction.

This would amount to a £522 saving over five years for a £7,500 loan, or £695 if £10,000 was borrowed.

However, Mr Hagger added, such deals are often restricted to existing customers, with M&S and Tesco being the only leading firms to make these new rates available to all.

A second caveat is that such cuts only apply to larger loans and those looking for smaller amounts such as £2-3,000 may be paying interest rates of nearly 20 per cent.

Such figures may indicate that those thinking of borrowing in this way may wish to do plenty of shopping around, but might also consider taking out a larger loan to consolidate all their existing borrowing.

By doing this, it may be possible to save money by bringing a number of debts together into one payment and having less to pay overall because the level of interest charged will be lower.

The new year will be the busiest time of 2011 for loans, because so many people will have debts to deal with after Christmas overspending, head of loans at Moneysupermarket.com Tim Moss recently predicted.

The hike in VAT to 20 per cent comes into effect today, which may lead to some in debt finding their finances are squeezed more.

Although the tax is not levied on all goods – with items like children’s clothing, newspapers and food being zero-rated – the cost will still affect many people, who could find themselves paying more for a range of goods.

The decision to raise the rate from 17.5 per cent was announced by chancellor George Osborne in his June emergency budget, with the reasoning being that it would raise £13 billion a year, thus helping to cut the deficit.

As may be expected, the issue has become a politically contentious one, with Labour leader Ed Miliband – in Oldham for a forthcoming by-election – arguing “it is the wrong tax at the wrong time”.

He also claimed: “The squeeze designed in Downing Street will come to your street, to the High Street, to every street up and down this country.”

However, Mr Osborne has said the measure is “tough but necessary” and argued it will be better for jobs than the alternative Labour suggested, of higher national insurance contributions.

Whatever the rights and wrongs of the political debates, for those who are already facing financial challenges and wishing to be debt free,now may be a good time to make new year’s resolutions to take action.

This could include seeking an individual voluntary arrangement to deal with their own deficits, a measure that can substantially reduce monthly repayments.

By Amy White

The number of people requiring debt management in 2011 as they continue to struggle to keep on top of their finances could be about to escalate, new research has suggested.

Carried out by Gocompare.com, the study – which included 3,000 UK adults – revealed 61.1 per cent of those questioned expect next year to be a very difficult time financially.

And it appears the imminent rise in VAT is among the biggest concerns for those questioned, with 22.1 per cent admitting the increasing cost of living and elevated bills are their biggest worry.

The VAT rise of 2.5 per cent is to come into effect on January 4th and the investigation found many individuals have reservations about how this will affect their spending habits.

Indeed, it has been shown a lot of consumers have already started delaying big purchases over the last 12 months.

More than a quarter – 25.53 per cent – said they have avoided moving house, while 21.2 per cent elected not to buy a car and 30.37 per cent refrained from taking a holiday abroad.

The study also found job security is a big concern for many Brits in 2011, as 31 per cent fear they may lose their job and are worried they will not be able to find enough work to maintain their standard of living.

John Miles, business development director at Gocompare.com, commented: “It looks like many of us will be tightening our belts even further in 2011 as money woes continue into the new year.”

The findings come after moneysupermarket.com noted 17 million UK adults worry about their monetary situation on a daily basis.

Posted by Amy White

It appears concerns over debt troubles may be affecting the New Year’s Eve plans of many UK adults, as new research has found half of Britons will be having low-key celebrations to save cash.

The study, carried out by NS&I, revealed 48 per cent of people in the UK will be staying at home as the nation welcomes in 2011.

According to the organisation, many households are placing financial planning high on the agenda for the first month of the year – starting with their New Year celebrations.

The investigation showed that of the revellers who are venturing out tonight (December 31st), 44 per cent plan to stay local in an effort to save on transport costs.

A further 49 per cent of those questioned claimed they will be heading to a friend’s house as the bell strikes 12 in a bid to keep costs down to a minimum.

And it appears the younger generations are the most keen to save the pennies this year, as 60 per cent of respondents aged 16 to 34 noted they are heading over to a mate’s place, while 51 per cent of 25 to 34-year-olds will be staying at home.

Savings spokesman at NS&I Tim Mack said: “While it is nice to celebrate and have a good time with friends and family on New Year’s Eve, it’s especially important that you don’t give yourself a financial hangover for the new year.”

However, recent findings from Allianz showed house parties can also be costly affairs, as the statistics highlighted such shindigs hosted by teenagers and organised through social networking sites have caused £14 million worth of damage to properties.

By Joe White