Up to 6.5 million people have been forced to consolidate their debts in the past three years in a bid to keep borrowing under control, new research* from MoneyExpert.com shows.
And 1.29 million of them have moved debts of more than £20,000 run up on loans, credit cards, store cards and overdrafts to one lender, the independent financial comparison website says.
The study shows 14 per cent of people have moved debts to one lender in the past three years and it is younger people who are most likely to have consolidated – 23 per cent of 25 to 34-year-olds have moved all borrowing to one lender.
MoneyExpert.com is urging anyone who is struggling to get their borrowing under control and to commit to cutting their debts. It has seen demand for secured loans increase significantly in the past six months. The comparison website says it has seen an 85 per cent increase in homeowner loan applications in the quarter ending January 2008 compared to the quarter ending October 2007**.
People consolidating debts of £20,000 or more are likely to be using loans secured against their house, MoneyExpert.com says.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be acting to get their debts under control.
"It is encouraging that so many people have taken action as you can make significant savings by moving all your debts to one place.
"With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving.
"However it is crucial that borrowers see consolidation as a wake-up call to get debts under control. It shouldn’t be something you keep on doing simply to tide you over from year to year."
Amount owed and percentage who consolidated that amount of unsecured debt in the past three years
Up to £5,000 30%
£5,001 to £10,000 25%
£10,001 to £15,000 16%
£15,001 to £20,000 8%
£20,001 to £25,000 9%
£25,001 to £30,000 4%
£30,001 to £35,000 1%
£35,001 to £40,000 2%
£40,001 to £50,000 2%
More than £50,000 2%
MoneyExpert.com offers a unique service which enables people to find the financial products which best meet their specific needs, and which they are more likely to be successful in being accepted for. It includes exclusive research conducted by MORI, which reveals providers’ service levels. This information is married up with a financial database which lists the products suited to the customer. For the first time, people can review a product’s price, features and also the level of service offered by the provider to enable them to make a more informed choice.
MoneyExpert.com aims to demystify the complex world of personal finance, and to help inform customers of the choices available. The service can be found at www.moneyexpert.com
* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,951 adults. Fieldwork was undertaken between 26th and 28th February 2008. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
** MoneyExpert had 22,848 homeowner loan applications in the quarter Aug-Oct 2007. In the period Nov 07 to Jan 08 this increased to 42,229 applicants.