Debt a “ball and chain” round Britain’s ankles
Consumers are taking advantage of low interest rates by paying off the capital on their mortgages, but are simultaneously racking up debt on their credit cards, an industry expert warned this week.
“What seems to be happening is that people are borrowing on their credit cards and paying off mortgages, which is wrong because credit card debt costs more to service,” said Peter Sargent, president of insolvency trade body R3.
“People quite frankly need to stop borrowing money right now and begin repaying their existing debts and the best thing to do is pay off your most expensive debt first,” he said.
Sargent added that the amount of personal debt owed by UK consumers is acting like a “ball and chain” around the ankles of Britain’s economy.
“Other European economies like France and Germany may well be coming out of the recession already and appear to be recovering fairly rapidly but the UK economy could be left behind,” he said.
“One of the reasons for this is because of the amount of debt we are carrying.”
Interest rates on credit cards are usually much higher than interest rates on mortgages, making credit card debt more expensive.