Brits Struggle to Repay More than Minimum on Debt
Research suggests more Brits are struggling with their personal debt, as some admit they will never be free of money problems.
UK consumers were asked about their approach to repaying debt in a survey by Moneysupermarket, and the results revealed one in seven only make the minimum repayment each month.
A further one in three admitted their personal debt had increased in the past year, while 10 percent said their debt had increased a lot, and this debt excluded mortgages.
“The nation has been reeling with inflation now at 4.5 percent, the highest levels since 2008, and the crippling effects of soaring living costs,” said Tim Moss, Moneysupermarket head of loans and debt.
“Whether using a loan or a credit card, borrowers must have a clear plan of how they are going to repay their debt and stick to it, or they’ll soon find themselves falling into the debt trap.”
A further four percent said they choose to pay the minimum amount on their debts each month to free up some disposable income, as finances continue to be squeezed by high inflation.
The average UK personal debt excluding mortgages currently stands at £8,430, which means a borrower who only pays back the minimum each month of about three percent, with a credit card rate of 18.43 percent, would take 24 years and four months to pay it off. In total they would also end up paying £7,488 in interest – almost the same amount as what they borrowed in the first place.
Those with the biggest debt increases were the younger groups, as a third of 18-34 years olds noticed their debt had increased in the last 12 months. This is 35 percent more than those who experienced the same problems over the age of 55 years old.