It advises people to tackle their bad finance habits in order to stay afloat during these tricky financial times.

One of the worst habits is that of living beyond your means. This fatal flaw is going to see huge numbers of UK adults sinking under unmanageable debt in coming months. People who regularly spend more than their income each month are obviously mounting up debts that they can never tackle. Many of these people will end up using credit cards to pay for basic living costs and then taking out personal loans to clear the credit cards. This is a ticking timebomb, according to MyVesta, the debt solutions provider, and they should know.

Another poor habit is allowing yourself too many credit sources. If you hold a handful of cards each with a limit of thousands there’s always the temptation to splurge. Add to this a number of catalogue accounts or store cards and suddenly all kinds of avenues are open for spending on days when your income is all gone. Moneyfacts strongly recommends paying off the cards or accounts with the highest amount of interest and limiting yourself to only a few once the balances are cleared.

Not being aware of your current financial situation is a big step in the wrong direction. Whilst few people know their exact bank balance, it is always wise to have a handle on your rough debt balance. If you haven’t tallied up all the money you owe in overdrafts, hire purchase, credit cards and loans then you’re burying your head in the sand. By being aware of what you owe you remain in control and can decide which bills need clearing most urgently.

Above all, be aware of missing payments. Many creditors see this as a green light to either slap you with a charge or raise the interest rate on your borrowings. Or both! Whilst borrowing may still be fashionable, there’s no point in spending money unnecessarily. Especially during the credit crunch!

Whilst we hope a full blown recession won’t be seen, the boom times seem to be definitely at an end for now and that means a change in financial habits. We are finally getting a wake up call that we cannot continue to borrow indefinitely and have to live without some of the things that we feel entitled to.

This adjustment should not be too difficult to take on board for older generations, but it might be a bit more of a tough adjustment for younger people. The young will have little recollection of the late eighties when the economy last went into recession and no memory of the days when loans were something only for businesses or buying a house.

The nation as a whole has grown used to the concept of regular holidays, new cars as a luxury, not a necessity, and splashing out on meals and clothes whenever the need takes. However, for many of those older than the ‘baby boomers’ (those born post-war), the memories are still fresh of the days of ’scrimp and save’.

Every generation has seen greater prosperity in this country and the days of ‘make do and mend’, ‘grow your own’ or clothes made from a penny pattern seem like myth to the youngest adults today.

The concept of going overdrawn was once upon a time considered shocking, and for many of the older generation today that viewpoint still holds. For these people, getting back into old ways of careful budgeting and knowing where every penny has gone will come easily.

For the younger generation, used to falling back on easy credit, or borrowing money to indulge a whim, budgeting is going to come as a sharp shock. The fact is that right now lenders are either unwilling or unable to lend money as lavishly as they used to, so if you don’t look after the money you have, you can’t bank on an easy loan to bail you out.

It is estimated that High Street banks have paid out somewhere in the region of £1 billion in reclaimed charges in the last year. However there is a growing amount of evidence suggesting that banks are increasingly using delay tactics in order to avoid paying back their customers. These delay tactics are even being used in cases where the bank has been told to repay by the courts.

Many unhappy customers who thought they were going to get their money back after banks were deemed to be charging illegal fees are now finding that their banks are stalling on paying them amounts that are in some cases worth thousands of pounds. For customers forced to take out debt-clearing loans on charges since deemed ‘illegal’, this is sickening as the loans are still charged interest whilst the customer awaits the refunds to clear them.

It is very common for banks to lose their cases in the county courts because they do not present a defence. However once they have been ruled against they appeal the judgement which ends up delaying the case for weeks and months.

Banks are also asking that judges dismiss cases in which they have been ruled against pending the outcome of a result in the High Court of a case brought by the Office of Fair Trading.

While the FSA has allowed banks to hold off on payments to customers who have requested repayments from the banks directly this ruling does not carry over to county court judgements.

Many cash withdrawals are being carried out using cards that do not have a security chip and the shocking thing is that it is the banks themselves that are allowing this to happen.

This is how it works. Currently there are roughly 140m cards in circulation in the UK and every day an average of 7m withdrawals are made from UK cash machines. Now it is only to be expected that some of these cards will be slightly faulty therefore if banks were to reject cards with a slight fault they would then be inundated with complaints from angry customers who could not withdraw their own money.

This has left the door open to fraudsters who can use cloned bank cards that do not come with a chip to get their hands on other peoples’ cash. This leaves bank claims that the system is foolproof as completely false.

The banking industry trade association for payments has admitted that an undisclosed number of the UK’s 60,500 cash machines will allow cloned cards to withdraw money provided the cloned card is used with the correct pin number.

Because bank customers are not protected from fraud in the way that credit card holders are, account holders could find themselves fleeced of their entire balance with no redress. Not only are people finding themselves without the money to meet their home loan repayments or rent, they are going into unauthorised overdrafts and forced to borrow money to cover the shortfall.

Under the terms of an IVA, if you own greater than £15,000 you can try and reach an agreement with your lender in which you only pay back a percentage of the loan or all of it, but the interest charges are frozen.

In the first 3 months of 2007, 11,300 Britons entered into such agreements with their lenders. That is a 50% rise one the same period in 2006 and goes to show how difficult many households are now finding it to deal with debts held in personal loans and credit cards.

However the problem is that now many lenders are taking an increasingly tough line on accepting IVAs. It used to be the case that many lenders would accept repayment on 25% of the loan or debt, however now that figure has gone up drastically and it is becoming increasingly difficult for many borrowers with severe debt problems to even repay their IVAs.

For example HSBC will now only accept an IVA if the borrower agrees to pay back a minimum of 40% of the loan while the student loan company will not allow their debt to be subject to any form of IVA or bankruptcy.

Northern Rock should use its own example when considering individuals in debt crisis. The crisis-hit bank rejects IVAs as standard practice. This is now becoming common practice from many lenders.

Research out today has sown that customers who have been charged fees paid an average of £742 over he past six years. This amount covers charges for what banks term ‘breaches’ and include unauthorised overdrafts, bounced cheques and direct debits that are not paid on anything from phone bills to personal loan repayments

Banks have expressed anger at the research, considering it comes at such a sensitive time, just as the banking industry is going to the High Court to decide the fate of these charges. Angela Knight, Chief executive of the British Bankers Association has claimed the figures are dangerous and misleading.

The worst bank for charges is Abbey where customers have paid an average of £1,376 in charges over the past six years. Lloyds TSB came in second with customers there paying an average of £800 over the same period.

Even more shocking is evidence that some customers, roughly one in twenty, have been charged at least £2,500 over the last six years.

Roughly four in ten bank customers have incurred a penalty fee since 2001. If you are facing financial difficulty then you could consider taking out a loan to help avoid getting too deep in debt, as well as the bank fees you might end up with a bad credit rating.

A recent study reveals that more than fifty percent of adults admitted to not reading the small print when buying financial products, mobile phones or electrical goods.  This is disturbing as often the lack of understanding of the fine print in your contract can lead to major problems or, in extreme cases, financial ruin.  Once a repayment contract on a credit deal – such as a mortgage or personal loan – has been breached, penalties and charges can snowball, putting the consumer at risk of losing their home.

One of the most important contracts where fine print must be completely understood is the credit card agreement.  All credit card companies are in the business to make a profit off their customers and with the Office of Fair Trading cracking down on unfair charges, credit card companies must then find other ways of making a profit.  Some of these ways include cash withdrawal fees, foreign usage charges; higher interest rates if the cardholder defaults as well as shorter interest-free periods.  It is important that consumers first read over the fine print of the credit card agreements before activating an account.  Often credit card holders fail to read over their agreements properly and overlook items such as handling fees for balance transfers or the high interest rates that are charged on cash withdrawals, and in some cases credit card providers are allowed to reprice a contract should the cardholder default on payments, which means they can then start charging a higher interest rate.