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Who will pay the eventual cost of the £3.5 billion write-off?

The Bank of England report this week which suggested that UK banks and building societies have written off £3.5 billion of consumer debt between April and June 2010 has shocked many people. Aside from the fact it is a concern that UK consumers are so heavily mired in debt it is also a surprise that the banks have agreed to write off such a large level of debt. But who will pay the eventual cost?

While the opportunity to write off your debts and start again will assist many people in the UK and relieve some of the pressure which has built up over the years, UK consumers will eventually pay the price. UK banks will look to increase their charges, increase their rates as well as tightening the criteria for loans and mortgages in the future. There is no doubt whatsoever that eventually the cost of this massive write-off will be recouped in some form even if this could take some time to complete.

The UK financial arena has had its fingers burnt during the credit crunch and the ongoing economic difficulties in the UK and areas such as mortgage deposit requirements have been impacted. As always UK consumers will ultimately pay the price of reckless spending in the longer term!

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