Managing my money
Managing my money

This free course is available to start right now. Review the full course description and key learning outcomes and create an account and enrol if you want a free statement of participation.

Free course

Managing my money

Week 4: Debt and borrowing

Introduction

The UK’s mountain of personal debt. Are there ‘good’ and ‘bad’ debts? How the Bank of England sets interest rates. Interest calculations – simple and compound. How does inflation affect the cost of borrowing?

Martin welcomes you back to tackle debt, interest and inflation.

Download this video clip.
Skip transcript

Transcript

Martin Upton
Hello again!
So far, this course has focused on the income and expenditure cash flows of individuals and households. This week will look at how people can use debt to finance their expenditure, and the costs associated with it.
Debt arises when we borrow money, and borrowing can take many forms - from credit cards and bank overdrafts to student loans and mortgages. It can be used to finance everything from day-today spending (you'll no doubt be aware of the growth in recent years of 'payday' loans) to holidays and items that we use over a number of years like furniture, cars and, of course, our homes.
The huge growth in the value of personal debt in recent decades has fuelled arguments about whether UK households are over-indebted and even about the morality of the lenders - the banks, the building societies and the finance houses - who have enabled this build-up of debt.
As personal debt in the UK has nearly quadrupled over the last twenty years to nearly 1.5 trillion pounds, it's important to identify the sources of debt, and whether those debts are 'good' or 'bad'.
As you work through this week, you'll examine the cost of debt - the interest we pay on our borrowings and what determines the level of interest rates we pay. Getting to grips with these factors is an essential aspect of financial planning.
The country has an array of financial advice agencies, and most of their work is tied up with people who have got into problems with their debts, with sometimes dreadful consequences for their lives. Don't be one of those, folks.
Have a great week.
End transcript
Copy this transcript to the clipboard
Print this transcript
 
Interactive feature not available in single page view (see it in standard view).

This course is presented with the kind support of True Potential LLP.

The True Potential Centre for the Public Understanding of Finance (True Potential PUFin) is a pioneering Centre of Excellence for research in the development of personal financial capabilities. The establishment and activities of True Potential PUFin have been made possible thanks to the generous support of True Potential LLP, which has committed to a five-year programme of financial support for the Centre totalling £1.4 million.

MMM_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has over 40 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus