A MAJOR high-cost loan firm with 150,000 customers is reportedly on the brink of collapse.
Indigo Michael, owners of SafetyNet Credit and Tappily are lining up insolvency experts, reports Sky News.
The company employs roughly 250 people and it has about 150,000 active customers.
AlixPartners, the professional services firm, continues to be lined up to handle Indigo Michael's insolvency.
It comes after the Financial Conduct Authority placed major restrictions on Indigo Michael which meant it had to stop lending.
On July 15, customers were told that lending had restarted.
But since mid-September, it is no longer possible to apply for credit online, according to Debt Camel.
If you try you're shown a note that reads: "Thank you for choosing SafetyNet Credit.
"Unfortunately, the application was unsuccessful as it does not meet SafetyNet Credit's lending criteria."
SafetyNet Credit gives you a borrowing limit which you can borrow up to – like a kind of rolling credit.
This means it isn't financing you repay and then need to make an application for another.
As long while you repay the loan amount, you are able to borrow more money without having to make an application for it.
For example, if you have a restriction of lb500 and withdraw lb400 and then repay that, you can immediately remove as much as lb500 again according to Debt Camel.
But unlike borrowing having a credit card, the lending company chooses just how much you need to repay and can take it for you automatically with the aid of open banking.
And SafetyNet Credit is an extremely expensive method to borrow.
The firm states that interest rates are charged at 0.8% per day only on any amounts you borrow, capped at 40 days with no extra costs with no hidden charges.
But a 0.8% each day rate of interest may be the maximum rate that the payday lender can charge.
Check if you're able to get a refund on interest charges
Sara Williams, founding father of Debt Camel, said certain SafetyNet Credit borrowers could be owed refunds on charges.
She said: "For those who have borrowed repeatedly from SafetyNet Credit for more than a few months then you should think about making an affordability complaint.
"This applies should you still have an energetic account if your balance has been paid inside a debt management plan or if you no longer owe anything."
If you think you are affected, it's worth filing a complaint with SafetyNet Credit by utilizing Debt Camel's free template letter.
We've previously explained how a large number of bank customers with overdrafts can reclaim unfair charges should they have pushed them into further debt.
How can I reduce borrowing costs?
The very first thing borrowers can perform is try to improve their credit scores.
Boost your credit score
Getting around the electoral register is a must when it comes to creating a decent credit score.
This proves who you are where you live meaning it's easier to get credit if you're out there.
It is also a good idea to look into the electoral roll for just about any errors. You are able to register by registering to vote.
Don't make too many credit applications as possible seen as a manifestation of financial distress – and each application will be documented on your file.
Use a "soft-search" eligibility calculator to show how likely you're to become accepted.
Always pay your bills as late payments will also be recorded in your file.
Try and cut down your overall debt before you apply for brand new credit as lenders may be unwilling to lend to you if you curently have a lot of debt.
The best credit card deals – using the lowest rates, biggest limits, cheapest fees and longest interest-free windows – are reserved for individuals with top-notch credit ratings.
Lighten your loans
If you got a loan a few years ago, it may be worth searching for a better deal.
Using a new loan at a lower rate to pay off a classic one can sometimes make sense.
But remember, not everyone has got the rates advertised by lenders, as these are reserved for those with a good credit score ratings.
Check which loans you're probably to obtain without damaging your score while on an eligibility tool such as the one on Compare The marketplace or MoneySavingExpert.com.
Blitz your charge card balance
Do not let credit debt linger. If you're just paying the minimum each month, it could take decades to clear.
Only making the average 2.5% minimum monthly payment on a lb5,000 balance means it would get you nearly 38 years to repay and cost nearly lb15,000 in total, on the typical interest rate of 22%.
Switch to a balance transfer credit card to obtain a window as high as 34 months without any interest charged.
Break the entire debt into monthly payments and set up a direct debit to make sure you wipe the balance in that time.
If that's impossible, try to switch again to a new card.
But not everyone can get the very best balance transfer deals, as they require a great credit score.
Find out which cards you're probably to obtain with the eligibility checkers on Go Compare or Uswitch.
Obliterate overdraft charges
Dipping to your overdraft may be one of the priciest methods to borrow, with a few banks charging 40% interest – almost double the amount average credit card rate.
Move to a bank with a free overdraft.
To pay off larger overdraft debts, a money transfer credit card may offer you an interest-free respite, but beware of high fees.
How can I get debt help?
If you're in debt, there are many services you are able to make the most of and they offer free suggestions about how you can manage debt.
Most of them can provide you free guidance and assist in person, over the telephone or online.
- Money Helper – 0800 138 7777
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000