Borrowers could save up to £1,100 on interest payments if they consolidated their debts into one homeowner loan, believes Alliance and Leicester.
Customers who compare loans would find that they could make substantial savings on the best rate deals available, says the bank.
It used the example of a borrower with £1,000 on three different store cards and £4,000 outstanding on a car finance deal.
“Debt consolidation with a best rate homeowner loan can save consumers hundreds, if not thousands of pounds, but it can also offer people a disciplined and cheaper method of paying back their debt,” Claire Alvey of Alliance and Leicester told My Finances.
“And even those who have just one outstanding loan or finance agreement can easily switch to a best rate personal loan, and potentially make a huge savings.”
Research by the Bank has shown that despite one in three planning to borrow money this Christmas, just over half intend to review their finances.
Only seven per cent of those with outstanding debts are considering a debt consolidation homeowner loan, however.
“With many millions of pounds spent on the high street in the run-up to Christmas, shoppers will need to look at their finances and consider the different ways they can save money,” said Ms Alvey.
“Debt consolidation on a homeowner loan is a sensible way of borrowing for anyone who has debt spread across more expensive store cards, credit cards or point-sale finance deals.”
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