Debts & Loans

A new study has revealed that debt consolidation loans could save UK’s borrowers up to £20 billion.

According to new research conducted by price comparison website, uSwitch.com, the total personal debt across the UK adds up to £1.45 trillion while Brits spend £98 billion a year on interest on debts such as credit cards and overdrafts.

The study found that borrowers could save billions on interest if they were consolidated to a low-cost loan.

The website found that £20 billion would be saved in interest payments while £800 will be saved within five years for an average household.

Louise Bond, personal finance manager at uSwitch.com, said: " “It is vital that borrowers give themselves the best possible chance of servicing their debt in the most economical and manageable way possible…If consumers are careful about managing their spending, a debt consolidation loan can help to reduce monthly repayments, and it can also help to settle borrowings earlier as the repayments are fixed and set for an agreed number of years."

However, “the consolidation clock is ticking” as six unsecured personal loan lenders have increased rates by two per cent despite the cuts in interest rates.

She added that 2009 could be the “toughest in history.”