moneysupermarket.com asked UK consumers about their approach to repaying debt and found one in seven (14%) only make the minimum repayment each month when paying off their debt. Ten per cent of these do so as they can only afford to make the minimum repayments, while a further 4% choose to pay the minimum to free up disposable income.
Further analysis from moneysupermarket.com found that the average amount of UK personal debt, excluding mortgages, is currently £8,430. A borrower making only the minimum monthly repayments of 3% on this, with an average credit card rate of 18.43% would take 24 years 4 months to pay off, and would end up shelling out an extra £7,488 in interest - 89% more than the initial amount borrowed.
Tim Moss, head of loans and debt at moneysupermarket.com, said: "The nation has been left reeling with inflation now at 4.5%, the highest levels since 2008, and the crippling effects of soaring living costs. It therefore comes as no surprise that people have seen a rise in the amount they currently owe, compared to 2010. “
The research also showed that 18-34 year olds were found to be the hardest hit by debt increases, with over a third (37%) noticing their debt had increased over the past 12 months - 35% more than those aged over 55 (24%). Perhaps more shockingly, 7% of those surveyed believed debt would always be a part of their lives.
Tim Moss continued: "The younger generation has been hardest hit by rising levels of debt and it is important this group deal with this problem early on, rather than admit defeat. It's also hugely worrying that 7% of people are resigned to the fact that debt will always be a burden in their life. There is no need for consumers to bury their heads in the sand when it comes to their finances and by taking steps to reduce personal debt, many of these problems can be nipped in the bud early on, before they escalate out of control.”