44% of Britons have admitted to having ‘debt regret’ for spending on their credit cards, overdrafts and personal loans.
Research from TSB has found that the average personal debt, excluding mortgages and student loans, now stands at £3,598, with 48% owing the most on their credit card.
The bank also found that 65% of people don’t know the interest rate on their credit card, overdraft or personal loan; meaning they can’t be sure exactly how much interest they are being charged each month.
Anonymous answers from over 2,000 Brits showed that most people used borrowing to pay for cars, holidays or day-to-day living, but some used the cash to spend on rather unusual items:
“I bought my pub lease with my credit card. I regret getting into debt for that.”
“I took out a loan a few years ago to buy a pair of cane toads and their vivarium plus accessories (but actually, I never regretted that!)”
“Vintage 1950’s double-decker bus and its restoration. Now on display in a museum.”
TSB has challenged Brits to make a ‘Leap Year Resolution’ – vowing to get on top of their debt and borrow well by the next Leap Year in 2020. The Bank is helping borrowers kick-start their Leap Year Resolution with the launch of a new debt consolidation calculator, where people can input their debt and monthly payments to see if they could be debt-free quicker by shifting and consolidating their borrowing.
Nick Smith, head of personal loans at TSB, said: “Though three and half grand might be manageable debt for some people, it can easily become debt regret, a burden to pay off – particularly if borrowers don’t know their interest rate.
“To see if people could save money, or switch to a better rate, it’s crucial they first of all dig out their credit card or loan statements, find out their interest rate and work out exactly how much they are being charged each month for their borrowing. They should then shop around to see if they could reduce the interest they pay, or use online tools, including TSB’s new debt consolidation calculator, to see if they could reduce their monthly payments or possibly be debt-free faster by switching their borrowing.
“But borrowing well doesn’t just mean moving debt to a cheaper rate, it also means making sure any future spending is planned for and is affordable. We’d urge people to keep a track of their daily spending to make sure any money they have going out, is covered by the money they have coming in. This can really help stop people getting into debt again.
“Credit cards, in particular, tend to have higher interest rates compared to loans. Though switching to a 0% balance transfer card is one way of managing debt, it isn’t always a long term solution. It’s really important for people to compare all the options open to them, and seek free, independent advice on managing their debt from organisations like Citizens Advice or the Money Advice Service.”