70 days of salary spent just to clear interest

New figures from Unbiased.co.uk, the find an independent financial adviser search, show that as a nation, we have worked the last 70 days solid to earn enough money just to service the interest on our credit card and loan debt, let alone re-paying the actual debt itself and thus Monday 10th March is hailed as Debt Freedom Day. This is a stark increase from last year, when Debt Freedom Day was the 1st February 2007, meaning we only spent 31 days to service our debts.

Unbiased.co.uk’sfigures show that personal loan levels in the UK increased to £9.8 billion, from £2.6 billion last year. At the same time average interest rates on personal loans are now 0.5% higher, which means that Brits pay almost £1.5 billion in interest payments alone. Credit card debt in contrast has dropped slightly, decreasing from £55.6 billion to £54.9 billion.

Personal debt levels in general have increased by over 10% over the last year and average levels of interest payable on this debt has increased by over 6%, Debt Freedom Day signifies just how much debt people still have to their name, and most importantly, the proportion of income needed to service this financial burden.

David Elms, Chief Executive of Unbiased.co.uk said: “This year’s Debt Freedom Day is a real warning for UK consumers – as it marks the day we start paying off the actual debt levels rather than merely servicing the interest accrued. Compared to last year we spend almost two months longer this year to pay off the interest of our borrowings and this doesn’t event take into account mortgage costs.

“While Debt Freedom Day is of course a hypothetical point in the financial calendar, people should pay attention to it. In the current economic client is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.

“Seeking independent financial advice can be the first step to taking control of your finances. An independent financial adviser (IFA) can assess your financial situation and help you identify where your monthly budgeting could be improved and help you embark on the path to saving.”

To help consumers take control of their spending habits, reduce their debt burden and convert some of their outgoings to savings for the future, Unbiased.co.uk offers an online guide full of information on how to budget better and reduce your financial burden. Consumers can also benefit from using the online budget calculator, as well as a series of handy tips to help rein in spending. For online information and details of local IFAs who can help you make your money go further visit unbiased.co.uk/getsaving or alternatively call free on 0800 085 3250.