You will never get rich paying interest

Popular financial website The Motley Fool - Fool.co.uk applauds consumers for tackling the UK consumer debt problem head on. According to the Bank of England, there was a net repayment of £0.3 billion of unsecured loans in August though net lending secured on dwellings rose by £1 billion.

The repayment of unsecured loans this month continues the stepwise reduction of consumers' dependence on non-mortgage credit. In July, net unsecured lending dropped by £0.2b while net mortgage lending fell by £0.4 billion.

Total consumer debt in August stood at £1,457 billion, which is comprised of £1,227 billion of secured lending and £230 billion of unsecured loans.

David Kuo, Director at The Motley Fool, comments: "The Government has a lot to learn from consumers who have woken up to fact that excessive borrowing is damaging to our wealth.

"The past decade has seen an unprecedented rise in binge borrowing by consumers at the expense of sensible saving. This even resulted in one financial quarter of negative savings in which we collectively borrowed more than we saved.

"But finally, common sense has prevailed. Consumers are returning to the savings habit. Bereft of sensible advice from the Government, people are now looking after themselves. They are paying down unsecured loans and, more importantly, investing for their futures.

"It is only a question of time before taxes will have to rise to pay for the mistakes of the past. Interest rates will also inevitably increase.

"There is very little that we can do about the former, but we should pay down as much debt as we can before the cost of borrowing increases. It is difficult to move forward with a mortgage millstone around our necks and you will never get rich by paying interest unnecessarily."