Debt help may be needed as earners only just clear interest

22/02/2010

Last weekend marked the average point at which people in debt will have earned enough to pay off the interest, according to Unbiased.co.uk.

The financial advice website found that, on average, people in the UK spend will have spent the first 50 days (up to February 20th) just earning enough money to pay off the interest on their debts, regardless of the debt itself.

Debt management support could help some people to make sure the money they are paying is being used in the most effective way possible to help clear debt or get their finances under control.

Karen Barrett, chief executive of Unbiased.co.uk, commented: "It may come as a shock that Debt Freedom Day actually only marks the day when we have paid of the interest on our debts, rather than the actual debt itself!

She added: "Debts can quickly mount up to a considerable sum and this date demonstrates that debt is something that we need to take control of and actively manage."

Kevin Still, director of EuroDebt, commented: "The statistics quoted can be very misleading for those with high levels of unsecured debts, especially on revolving credit like store cards and credit cards.

"Low base rates don't mean low interest rates on cards, as we have seen recently many providers have increased rates quite substantially and many cardholders making minimum payments are just servicing interest and balances aren't reducing. Non-borrowing solutions like Debt Management Plans can be a very effective solution for those caught in a debt spiral."

Posted by Fiona Smith

Tags; Debt Management and Banking,

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