Don’t go mad with debt consolidation loan, says uSwitch

Research by uSwitch has revealed that many borrowers are failing to shut down other sources of finance and are instead spending, on average, in excess of £2,300.

Nick White, from the website, said that taking out an unsecured loan to consolidate multiple debts is not a quick-fix solution and should not be viewed as a green light to spend more money.

“Those who consolidate all their debt into a single loan should only borrow enough to cover all their debts and no more,” he stated.

Research which shows that two-thirds of all those who took out a debt consolidation loan in 2006 still failed to manage their money properly highlights the “overwhelming need” for good financial planning, said uSwitch.

This could help households save £160 or more every year in interest.

“These statistics highlight the need to educate consumers about effective debt management,” Mr White added.