In exchange for a cash reward of £15-£25, consumers could end up paying thousands of pounds in fees for a product they could get for free elsewhere.
Taking out a debt solution with Money Advice Group through Quidco could earn you £25 in cashback. However, there is no mention on Quidco’s site about the fees you would have to pay under a Money Advice Group debt management plan.
It will keep all of your first month’s repayment and then all but £1 per creditor in your second month. The company then charges a monthly fee of 17.625% of your repayment, with a minimum of £37.50.
A debtor with six creditors who can afford to repay £200 a month would pay the company £769 in fees in the first year alone.
Martyn Saville, Which? credit expert, commented:
"The value of any cashback deal depends on how good the underlying product is - cashback sites can provide a great way to cut the cost of a whole host of products. However, commercial debt management companies never offer the best deal to consumers, even if they offer cashback.
"Not only will any cashback quickly be wiped out by hefty charges, but many debt management companies give poor advice and sell inappropriate debt solutions.
"You are much better off using a free debt advice organisation such as the Consumer Credit Counselling Service or National Debtline instead."
Una Farrell of the CCCS was equally unimpressed with the tactic.
She said:
"For Money Advice Group to be offering cashback on debt solutions is, I believe, a cynical way of targeting the most vulnerable debtors.
"The awful thing is that it will be those in the most dire of situations who will be tempted by the offer, and who will pay for debt advice that will only increase their burden."
