Debts & Loans

With many consumers looking to cut their borrowing in the most economical way, new research suggested that UK households could be missing out on savings of £20 billion a year by not consolidating their unsecured debts.

The comparison site's study said this would take a substantial chunk off the £98 billion that consumers currently pay in interest on their credit cards, overdrafts and unsecured loans.



It added that a family with average debt levels could reduce their outgoings by up to £803 over five years if they consolidated their existing borrowing into the best loans on the market.

However, the company warned that the "consolidation clock is ticking" because despite falling interest rates, six unsecured personal loan providers have actually increased their rates by two per cent.



The site added that anyone considering debt consolidation must adopt a disciplined approach. Its research shows that just 23 per cent of people closed off existing debts they should have cleared with a consolidation loan - and 26 per cent of these went on to accrue further debt.

According to Credit Action, the average debt for households with some form of unsecured borrowing is pound 21,875.