Debt spiralling out of control

Research from Moneysupermarket.com, the comparison site, have discovered that consolidating existing debts is a waste of time as those doing so will end up owing even more money.

The research showed that over 8 million people consolidating debt end up taking on more and over 5 million believe that they will always be in debt.

Moneysupermarket.com established that 12.7 million of Britons have taken out a loan to consolidate some or all of their existing debt. However, 8.4 million of those built up even more debt.

At the end of July 2007, total UK personal debt stood at more than £1.3 trillion, where the growth rate increased to 10.1% for the previous year which equates to a rise of £117 billion according to national charity Credit Action. Personal debt in Britain is growing by £1 million every 4 minutes.

Furthermore, banks are feeling the pressure of consumers defaulting on their loans. A crackdown on consumer credit is taking place and banks are tightening their lending criteria. Also, personal loan rates are being pushed higher.

A spokesperson for Moneysupermarket.com remarked that 40 years ago, being in the red was a last resort. It appears that Britons today are much more comfortable taking on debt. Moneysupermarket.com added that taking a personal loan to consolidate debts can be a useful way to control your finances but should be approached with a lot of thought.

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