Loans and overdrafts at 10 year low

Households have cut back sharply on personal loans and overdrafts, leaving them at the lowest level for 10 years according to the latest snapshot of lending from Britain's banks.

They've also been trying to save more in the face of worrying economic prospects.

Family budgets have been coming under heavy strain as incomes stagnate and inflation increases - and there's the fear of job losses.

So people have been busily repaying personal loans and overdrafts, to the tune of £200m in the last month alone.

And they're attempting to save more -- total savings are up more than 8 billion pounds so far in 2011.

But that's a smaller increase than last year as the rising cost of living soaks up spare cash.

Brother can you lend a dime?

CREDIT CRUNCH FORCES FAMILY MEMBERS TO LEND TO EACH OTHER

Parents, grandparents, brothers and sisters are asking each other for money more frequently, as household budgets come under pressure in the wake of the credit crunch, rising prices and job losses.

This form of lending is notoriously hard to measure. But 63% of a sample of 2,000 adults reported an increase in family members approaching relatives for money as a direct result of the credit crunch.

15% of family members are lending to each other on a regular basis, with the average loan running at £2,300 across the UK. Often the sum is more than they owe on credit cards.

The research, from insurance group Aviva, identifies parents aged between 40 and 60 years of age coming under particular pressure to lend, either to children who are short of funds or to grandparents who have retired and are hard put to find affordable borrowing.

Ever wondered how to calculate an APR?

Here's the equation you should use!

where

• X is the APR;
• m is the number of the last drawdown;
• k is the number of a drawdown, thus l ≤ k ≤ m;
• C_k is the amount of drawdown k;
• t_k is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the date of each subsequent drawdown, thus t_l = 0;
• m’ is the number of the last repayment or payment of charges;
• l is the number of a repayment or payment of charges;
• D_l is the amount of a repayment or payment of charges;
• S_l is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the date of each repayment or payment of charges.