Brits' Debt Interest Payments Take 70 Days Salary To Clear

Mon, 10 Mar 2008

New research has revealed that Brits have to work for at least 70 days to earn enough cash to clear the interest on personal loan and credit card debt .

Price comparison site Unbiased.co.uk has identified today - Monday 10th March - as Debt Freedom Day, meaning that from today onwards, consumers can begin paying off their actual loan and credit card debt rather than dealing with interest payments.

The website revealed that for 2008 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 (up from £2.6 billion last year) and £54.9 billion on credit cards (a decrease of £0.7 billion).

Meanwhile both personal debt levels and interest rates were found to have increased from last year, with Brits now paying almost £1.5 billion in interest payments alone.

David Elms, chief executive of the firm, explained: "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."

"In the current economic climate it has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so," he added.

In addition, research by the Co-operative Bank found that the average Brit spends 13 billion hours a year – two years worth of sleep - worrying about their borrowing and spending habits.

The bank’s savings product manager, Scott McPhail, commented: "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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