Brits 'comfortable' with loan and credit card debt
British households could wipe nearly £30 billion from their personal debts, but many simply cannot be bothered.
By receiving financial advice, ten households were able to reduce their personal debts by £1,215 on average in just three months.
If the same level of success was applied to each of the UK's 24 million plus households then personal debt would be reduced by £29.7 billion.
These are the findings of an ongoing experiment by AXA on the impact that regular financial advice can have on reducing personal debt.
But research indicates that 70 per cent of Britons were not bothered about their debt, including loans and credit cards, because most people have some debt these days.
With the proliferation of cheap loan and cheap credit card deals, four out of five Brits feels it is more acceptable to be in debt now than it was 20 years ago, according to national research by AXA to accompany the project.
And the majority are comfortable with borrowing up to £6,370 - about 28 per cent of the average national salary; although some would happily borrow as much as £50,000 on loans and credit cards.
The AXA Avenue experiment involves 20 households from Brighton being given advice by independent financial adviser Saran Allot-Davey.
Launched in November 2005, Ms Allot-Davey has spent time with the first ten households and the results from the first quarter of the experiment are now available.
Among the achievements are improved attitudes to finance, with participants taking proactive approaches to clearing debt on loans and credit cards by selling unwanted items on eBay.
Some participants have cut up their credit cards and started using the web to research the cheapest deals from utility providers, while others are now joining pension schemes to secure their retirement.
Ms Allot-Davey said: "The first quarter has been challenging because the focus has been on dealing with managing and reducing debt, however it was vital that we tackled this before starting to look more long term. I believe we have made some good progress so far, with most participants paying much less interest on their loans, having reorganised or consolidated them."
"The best bit for me has been the enthusiasm of the group and seeing how well some have responded to some basic financial guidance. I believe that people are generally apathetic when it comes to managing and reducing their debt and tend to need a catalyst to drive positive financial change."
For more information, go to: Axa Avenue
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