Debts can drain payday dry

Friday Feb. 9, 2007

As most people with credit cards or personal loans know, the interest rates can be cripplingly high. The most recent research has gone a long way to support this showing that, as a nation, the UK will work all month long just to earn enough money to service the interest on credit card and loan debts.

Considering that the amount of interest accumulated on the average credit card and loan debt is £2,012, it would take a person earning the UK average wage of £23,556 a total of 31 days (or all of January) to repay that alone, never mind the outstanding debt itself.

Although on a slightly more encouraging note, the levels of personal debt across the country have been reduced by 7 per cent over the last three years, and the average amount of interest payable on this has also dropped by a huge 59 per cent.

Reliance on borrowed money is still high though and for every £1 saved, we are borrowing 49p.

February 1 2007 was declared Debt Freedom Day, which David Elms, chief executive of Unbiased.co.uk, believes “does serve a real purpose and should be seen as a wake up call to those who carry personal debt.”

He goes on to add: “Average levels of personal debt continue to fall year on year, but the real headline will come when official figures show people controlling their spending behaviour and increasing their saving power, and this date becomes a non entity.”

News Source: http://www.themoneypages.com