More Brits Turn to Consolidation for Debt Relief

Tue, Mar 18, 2008

New research claims 6.5 million people in the UK have no choice but to consolidate their debts, in an attempt to keep their finances under control.

MoneyExpert.com reveals that 14 percent of Brits have consolidated their debts as a measure to control their borrowing habits and unruly finances over the last three years.

The study revealed that 1.29 million have consolidated debts of £20, 000 or more, built up by loans, credit cards, store cards and overdrafts.

Surprisingly to some it is younger people that are more likely to transfer their debts to one lender, with 23 percent of 25 to 34 years olds consolidating their debts, claims the study.

In addition, the demand for secured loans has increased dramatically over the past 6 months. The study claims that those who consider a secured loan do so against their homes. Findings from the latest study support this claim, revealing a staggering increase of 85 percent in applications for homeowner loans since October 2007.

“It is encouraging that so many people have taken action as you can make significant savings by moving all your debts to one place,” says Sean Gardner, Chief Executive of MoneyExpert.com

“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 Gardener claims that borrowers should see consolidation as a wake-up call to get debts under control and not a measure which can be carried out repeatedly.

If you are considering a consolidation loan, do so carefully. “Around half of all consolidation loans carry a penalty for early settlement,” says David Kuo, Head of Personal Finance at Fool.co.uk. For more information read: What to Look For When Choosing a Loan

Source: http://www.financedaily.co.uk/showNews.aspx?loadid=001041