70 days to pay credit card and loan debt

Monday, 10 March 2008 01:00

It takes 70 days' earnings to clear the average person's personal loan and credit card interest payments - making March 10th Debt Freedom Day.

This year UK residents are expected to pay a total of £1.5 billion in interest on debts - with a total of £9.8 billion owed on personal loans and £54.9 billion on credit cards, according to unbiased.co.uk.

Over the past year both personal debt levels and interest rates paid have increased, meaning the debt burden is growing while at the same time wage growth remains muted.

David Elms, chief executive of Unbiased.co.uk, said: "This year's Debt Freedom Day is a real warning for UK consumers - as it marks the day we start paying off the actual debt levels rather than merely servicing the interest accrued.

"Compared to last year we spend almost two months longer this year to pay off the interest of our borrowings and this doesn't even take into account mortgage costs."

He went on to advise people to seek the help of an independent financial adviser (IFA) to assess their financial position as the current economic climate means it is more important than ever to focus on the cost of servicing debt.

As the UK's debt grows, research by the Co-operative Bank reveals Brits spend 13 billion hours a year worrying about how much they owe.

On average we worry about debt for eight days 18 hours and 36 minutes, it is claimed.

Scott McPhail, savings product manager at the Co-operative Bank, said: "It is worryingly clear from the research that the vast majority of UK adults are deeply concerned about their finances, with rising levels of debt and inadequate saving provisions responsible for countless sleepless nights nationwide."

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