Consumers advised to make cards debt priority

Consumers should think about paying off their credit cards ahead of their mortgages, a financial analyst has advised.

President of the Business Recovery Professionals (R3) Peter Sargent welcomed the news in Credit Action’s recent survey that overall UK consumer debt has fallen.

However, he noted, the picture is “mixed”, with a widespread tendency of consumers to concentrate on paying off mortgages while relying heavily on credit cards.

This prioritisation amounts to a flawed financial strategy, he argued, stating: “People are borrowing on their credit cards and paying off mortgages, which is wrong because credit card debt costs more to service.”

Consumers should always seek to pay off the higher interest rates first, he commented.

People keen to manage their credit card debts better may be able to switch to deals with a lower rate.

The average UK household owed £9,226 excluding mortgages and £58,280 with home loans, the Credit Action figures revealed.

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