Debts & Loans

Borrowing to cover debt consolidation is expected to top £2.93 billion in the first three months of 2009 as consumers look to take control of their finances after Christmas and the new year, it has been claimed.

Figures published by Sainsbury's Bank said a total of 250,000 personal loans are expected to be taken out by March for the purposes of debt consolidation, which bundles together multiple outgoings and replaces their repayments with a single monthly sum.



The bank added that debt consolidation now accounts for approximately a quarter of all personal loans. The average amount taken out to deal with debts on credit cards, store cards or other forms credit is £12,000.

This year, economic pressures could lead to around 18 per cent of the annual total of debt consolidation loans being taken out in January.



Sainsbury's Bank head of loans Steven Baillie said: "Paying a number of individual rates of interest which could be as high as 30 per cent or more on some store cards for example is not the best way to approach your debt."

According to Credit Action, personal debt in the UK currently stands at £1.45 trillion.