'Huge challenge' getting interest rate rise message to those at 'sharp end'

Many Britons who are struggling with debts are unaware that the cost of their borrowing could start to rise soon, a charity has warned.

The Money Advice Trust (MAT) found that nearly four in 10 (38%) people who called its National Debtline advice service for help with their finances did not know that interest rates may rise in the near future.

It said its findings highlighted the "huge challenge" of helping people who were likely to be at the "sharp end" of interest rate rises to prepare for the increased cost of borrowing that would come after the Bank of England base rate moved up from its record 0.5% low.

The charity also raised concerns that the debate over the impact of interest rate rises had so far focused on households with mortgages.

It said people living in private rented accommodation were also facing the prospect of higher rents as landlords would pass on their additional cost to tenants.

Last week, Chancellor George Osborne said Britain must prepare for rises in interest rates.

Speaking in Cardiff, Mr Osborne said: "One of the biggest monthly bills that many people pay is their mortgage and an important source of income for people is their savings, so it's no wonder that people are starting to talk about what a rise in interest rates might mean for us all.

"Inevitably, with the US Federal Reserve having made their decision to raise rates last month, there is a discussion of how and when we begin to move out of a world of ultra-low rates."

The Bank of England has previously indicated that any rate rises will be small and gradual.

Joanna Elson, chief executive of the MAT, said: "The Chancellor's warning to Britons to prepare for higher interest rates was welcome, but the evidence suggests we face a huge challenge in getting this message across.

"This is particularly true of those with existing financial problems, who will be at the sharp end of interest rate rises when they do arrive."

More than 6,000 clients of the MAT took part in the survey between August 2015 and January 2016.

Here are the National Debtline's tips for preparing for interest rate rises:

- Prepare a household budget. Look at what is coming in each month and what you need to spend your money on. Remember to include annual costs like car insurance in your monthly budget by dividing the cost by 12.

- If you have a variable rate mortgage, consider whether it is worth taking out a fixed rate deal to give yourself some protection against future rate rises. You may want to seek professional advice about this.

- Deal with existing debts now. If you are already in arrears with your mortgage, rent or have other debts, do not put off dealing with them.

- Maximise your income and re-examine your costs. This could include checking you are claiming all the benefits that you are entitled to, making sure you are paying the right tax or looking at the hours you work.

- Seek free advice if you are struggling with existing debts or unpaid bills.