British borrowers reached Debt Freedom Day on March 10th – the theoretical point in the year where they have paid the interest on their loans and credit cards and can actively purse becoming debt free, new figures show.
According to financial advice website Unbiased.co.uk, it took consumers 70 days to earn enough money to have hypothetically paid off the interest on their debts this year, compared with 31 days in 2007.
Overall, it said, personal debt levels have risen ten per cent in the last 12 months, while interest payments on this debt increased by six per cent.
Borrowing in personal loans rose from £2.6 billion in 2007 to £9.8 billion, while credit card spending now stands at £54.9 billion, the website said.
Unbiased.co.uk chief executive David Elms commented that current economic conditions mean it has “never been more important” for consumers to know the cost of servicing their debt
“Compared to last year we spend almost two months longer this year to pay off the interest [on] our borrowings and this doesn’t event take into account mortgage costs,” he said.
Meanwhile, a new survey by RBS Group found that only 31 per cent of 11 to 19-year-olds think they will get into debt.
One option for people looking to manage debt is an Individual Voluntary Arrangement (IVA) or debt consolidation loan.