In this recession there is no doubt that people must be looking to the long-term – that means shying away from unsecured debt that is steadily increasing.

Since the start of September, uSwitch.com has found that another three unsecured personal loan providers have implemented rate hikes of up to 1.2% for new customers. This product ‘tweak', although seemingly small, could cost personal loan customers an extra £322 in interest paid on a typical loan of £10,000. It says with UK consumers currently forking out £181m in interest daily, this will only add to an already hefty bill.

Without security, the lenders have little to offset risk, so all they can do is increase mortgage rates. They need to make sure that their investment is safe, so they ask you for money each month. This is fine if you can afford it, but if you are already struggling a very small increase could be the straw that breaks the camel's back – uSwitch.com says the average loan rate has increased from 9.04% to 9.08% in the last year. That might sound like a tiny amount, but it all adds up and could cost dear.

The best way to be sure that your debt will not keep increasing is by using secured finance to consolidate all your unsecured debt away. It would mean lower rates, more flexible terms and a better chance to get on top of your money problems. Because it's secured debt, the lender has a property or an asset as collateral, so their risk is reduced and they don't have to keep hitting you with high fees.

Secured debt is always better than unsecured loans. And as time goes on, secured debt will continue top be manageable and shouldn't impede you making money. Talk to a mortgage adviser about making the most of your secured assets now.

SOURCE: uSwitch.com, 17/09/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.