Five million Brits in 'debt sentence'
12 September 2007
Britons who consolidate their debts using personal loans should not become blase about the money they owe, a new report claims.
According to moneysupermarket.com, 28 per cent of Britons, equating to some 12.7 million people, have taken out a loan to consolidate their existing borrowing, with over five million Britons believing they will always be in debt at some point in their lives.
Of these, 66 per cent continue to build up more debt, despite having taken out a personal loan to consolidate the money they owe.
While still paying off the original loan, five per cent of people took on another loan, while 12 per cent went into their overdraft. Over a quarter of people accumulated debt on their credit card.
"Debt has become the common curse of modern times. People need to be careful that the ease of getting credit doesn't catch them out. It can soon spiral into a debt sentence," Tim Moss, head of loans and debt at moneysupermarket.com, said.
"Taking a personal loan to consolidate debts can be a useful way to get your finances under control. But a loan for these purposes should be considered carefully and only regarded as a measure for becoming debt-free - not as a license to go spending again," he added.
According to figures from Credit Action, consumer credit lending in the UK stands at £214 billion, with Britain's personal debt increasing by £1 million every four minutes.
