Tuesday, March 8, 2011
Category:
Consolidation
According to unbiased.co.uk, 2010 was a ‘record year for consumers repaying their debts, but savings levels suffered as a result of it’.
The professional advice website’s research has revealed that in the final quarter of last year, borrowers repaid 14p of unsecured debt in every pound that they saved. This marked a fall from the previous quarter when the figure reportedly stood at 16p. In contrast, an ‘all time high’ was found to have occurred during the first two quarters of 2010, when 19p in every pound was repaid.
Findings have led unbiased.co.uk to the conclusion that ‘the overall trend of 2010 is that consumers have become even more conscious of their debt levels and have been working hard to repay what they have borrowed’. It has been revealed that at the height of debt repayment in 2010, a combined sum of £12,081 million was repaid. Reasons for consumers’ diminishing appetite to take on more debt are thought to potentially include the ‘ongoing strain on personal finances and the volatile economic environment and uncertainty in the market’. Furthermore, borrowing restrictions are also believed to be making it more difficult for consumers to take out loans.
In terms of 2010 savings levels, the research showed that there was a fall each quarter – going from nearly £20 billion worth of new savings in the first quarter to little over £15 billion in the final quarter. It is thought that the ‘low interest environment is discouraging savers, resulting in more of them instead choosing to pay off their debts’.
Chief Executive of unbiased.co.uk, Karen Barrett, said: "Brits' borrowing habits returned to better health throughout last year and it is encouraging to see the trend for debt repayment increasing in 2010 compared to 2009. However, debt repayment levels have tailed off towards the end of last year, therefore it will be interesting to see how this will develop during 2011.
"As the cost of living increases and with higher taxes on the horizon, combined with continuing low interest, we will see an effect on consumer savings habits and our figures already show overall savings levels have steadily fallen over the past few years. This trend highlights a real concern for the nation's personal finances as we see people dipping into what is essentially their financial safety net. In order to ensure you are making the right choices with your finances, it is vital to seek professional advice from an independent financial adviser (IFA). An IFA can advise you on striking the best balance between borrowing and saving, as well as look at your overall financial position and recommend products from the whole of the market. You can carry out a free and confidential search to find an independent financial adviser near you by visiting unbiased.co.uk."
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Homeowners who are juggling multiple debt repayments each month could consider taking out a secured loan to tie them all up into one place. One of many finance options available, a
secured loan for consolidation could allow borrowers to reduce their monthly debt repayments down to just one. What’s more, this single monthly repayment could even be lower than the sum of current outgoings. Therefore, borrowers could have extra money left over each month, which could potentially be set aside in a savings account. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
