Quest to become debt free can save millions in interest

Britons are paying out no less than £176 million in interest payments a day, new figures have shown.

The latest Credit Action digest of statistics revealed the figure, based on what consumers have to pay for loans, credit cards, storecards, mortgages, hire purchases, overdrafts and other forms of credit.

It adds up to more than £64 billion a year and for many, this could be an unmanageable burden requiring drastic action like an individual voluntary arrangement or bankruptcy.

Others keen to become debt free and rid themselves of such a burden may wish to try debt consolidation measures, which could reduce monthly payments and make it quicker and easier to reach the point where there is no more to pay.

The digest of figures offered other details showing the consequences of such debt, from the 334 people a day declared insolvent or bankrupt to the 99 repossessions every 24 hours.

But some will also be adding to debt with £24.1 million card transactions and £478 million of cash withdrawals at ATMs each day – the latter impacting on overdrafts in some cases.

Indications that some Britons have been consolidating their debt emerged recently with the publication of the latest Finance and Leasing Association (FLA) data.

This showed that in the year to June, the overall level of lending by FLA members dropped by three per cent.

Most notably, storecard borrowing plunged by 22 per cent, with second mortgages 11 per cent down and credit card use dipping by four per cent.

Only car finance increased, being up one per cent.

By Joe White