29th February 2016
Almost half of Britons, at 44%, have ‘debt regret’ as a result of impulsive spending new research has found.
Holidays, even tropical fish and expensive meals are just some of the unusual answers Britons have given for getting themselves into the situation.
Research from TSB has found that the average personal debt, excluding mortgages and student loans, now stands at £3,598, with 48% owing the most on their credit card.
Worryingly the data also shows that nearly two-thirds, at 65%, of people do not know the interest rate on their credit card, overdraft or personal loan; meaning they cannot even be sure exactly how much interest they are being charged each month.
Anonymous answers from over 2,000 Britons showed that most people used borrowing to pay for cars, holidays or day-to-day living, but some used the cash to spend on rather unusual items.
Whilst most people said they regretted getting into debt for holidays and cars, below are further examples of unusual debt regret spending…
“A holiday for £2000. I regret this because it’s taking forever to pay it back.”
“I regret buying a Kirby vacuum cleaner! Massively overpriced and took years to pay off.”
“Car finance when I was younger. Just wanted a nice car, but should have settled for something less and not got into debt.”
“A knitting machine for £600.”
TSB is now calling Britons to make a Leap Year Resolution – vowing to get on top of their debt and borrow well by the next Leap Year in 2020.
Nick Smith, head of personal loans at TSB, said: “Though three and half grand might be manageable debt for some people, it can easily become debt regret, a burden to pay off – particularly if borrowers don’t know their interest rate.
“To see if people could save money, or switch to a better rate, it’s crucial they first of all dig out their credit card or loan statements, find out their interest rate and work out exactly how much they are being charged each month for their borrowing.
“They should then shop around to see if they could reduce the interest they pay, or use online tools, including TSB’s new debt consolidation calculator, to see if they could reduce their monthly payments or possibly be debt-free faster by switching their borrowing.”
But borrowing well does not just mean moving debt to a cheaper rate, it also means making sure any future spending is planned for and is affordable.
Smith added: “Credit cards, in particular, tend to have higher interest rates compared to loans. Though switching to a 0% balance transfer card is one way of managing debt, it isn’t always a long-term solution.
“It’s really important for people to compare all the options open to them, and seek free, independent advice on managing their debt from organisations like Citizens Advice or the Money Advice Service.”