The Citizens Advice Bureaux have produced a report that says there has been a staggering 45% increase in the number of new consumer credit debt problems over the last 5 years.

The report says that people who go to the CAB for advice with debt problems owe on average, fourteen times their monthly income. An unmanageable amount which is leading to stress, depression and anxiety.

The government is currently in a consulation process to come up with some solutions for people who don't have access to mainstream credit.

These people tend to be the worst affected because they often end up paying high levels of interest which they can ill-afford.

Working Lunch is working hard to bring an end to un-capped interest rates and as part of our effort, we've been doing some digging.

Traps

One of the main debt traps that people fall into is taking out finance deals on domestic applicances and household items.

The retailers of fridges, hi-fis, washing machines and furniture frequently offer deals at elevated rates of interest which can lead to consumers paying almost twice the original value of the item. Interest rates of over 100% are not uncommon.

One such retailer, Brighthouse, offers a Newhome cooker for sale in store at �703.29. Yet if you choose to pay for this over 3 years at �9.99 per week using their credit deal, you'd end up paying �1,558.44.

Admitted, this price includes extended warranty cover, but that's a mark up of 121%.

Even if you choose the credit deal that excludes the warranty you'd still part with nearly half as much of the original price on top.

Brighthouse price: �703.29 156 weeks at �9.99: 1,558.44 156 weeks at �6.49: �1012.44 Argos price: �495.00

We spoke to Brighthouse and were told that their financing does not work out much more expensive than paying for the cooker with a credit card bill.

But taking an APR of 29% over the same period of 156 weeks works out at �925.65. A hefty price but still quite a bit less than with Brighthouse.

Their defence?

"We do charge this, because if you don't have a credit record you have to pay a premium," says Andrew Dowler of Brighthouse.

But it's not just Brighthouse that is guilty of milking the uncreditworthy.

Some of the big names in the finance world are in on the game of 'sub-prime lending' as it's known.

Bright House itself is owned by the Japanese investment bank, Nomura. Abbey National has a share in First National finance as has GE Capital. HSBC owns Beneficial Finance and Citibank owns the Associates.

Provident Financial, often referred to as "the Provvy", and offers finance on the doorstep, became a member of the FTSE100 on March 13th 2003.

Perseverance

One Working Lunch viewer Nicola Cottier felt she was being forced to accept a higher than average interest rate on a loan because she was 'debt heavy'.

Nicola has a mortgage plus a second loan. She wanted a third loan to pay off some debts. Both her lenders, the Abbey National and IG, were quite difficult and tried to force her into paying above the market rate for a new loan.

"I felt very angy," says Nicola, "so I wrote to the bank manager and appealed the decision."

The moral, in Nicola's opinion, is to take it further.

Pushing for change

As we have previously reported on Working Lunch, one in five of us does NOT have access to mainstream credit and so has to borrow at a much higher rate.

This market is worth �30-billion a year. The Government is consulting with members of what is called the sub- prime lending market and with groups who have to deal with those in debt.