6.5 Million people consolidate debts
Around 6.5 million people have consolidated debts in the last 3 years in order to try and keep in control of their debts. The new research from www.moneyexpert.com also shows that 1.29 million of the 6.5 million people have unsecured debts of more than £20,000. So that’s debts run up on personal loans, credit cards, store cards and overdrafts.
By ‘consolidation’ this research shows that 14 per cent of people have consolidated all their unsecured debts with 1 bank. www.moneyexpert.com also say that demand for secured loans has increased significantly over the last 6 months. Often people who are struggling to keep up with their debts turn to secured loans or homeowner loans in order to pay off unsecured debt with a loan secured on the equity in their home. The problem is something like 60 per cent of people who do this then continue to use credit cards and apply for personal loans stretching their finances to breaking point.
Chief Executive of MoneyExpert.com, Sean Gardner, offers some sensible advice. He said: “Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be acting to get their debts under control.
“It is encouraging that so many people have taken action as you can make significant savings by moving all your debts to one place.
“With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving.
“However it is crucial that borrowers see consolidation as a wake-up call to get debts under control. It shouldn’t be something you keep on doing simply to tide you over from year to year.”