- Products & Services
- Knowledge Base
MANCHESTER, ENGLAND, January 25, 2010 /24-7PressRelease/ -- According to a recent research study by ThinkingMoney, UK Household debt has reached a staggering GBP1.35 trillion in June, more than the country's Gross Domestic Product, which is estimated at GBP1.33 trillion. This means the UK's 60 million people currently owe more than the entire country can produce in one year. With the UK having the seventh largest GDP in the world, this is deeply concerning.
Those carrying the bulk of the debt include young families and 20-something adults who have just purchased their first home. Today, many members of this demographic carry GBP10,000 to GBP15,000 worth of student debt, in addition to a mortgage that equates to three times their annual income.
Thirty years ago, this simply wasn't the case, since mortgages would only require one and three-quarter years worth of income. Also contributing to the problem is wages, which remain relatively unchanged during the past thirty years when compared to the rising costs of living.
As a result, the number of county court judgements for debt, bankruptcies, repossessions, and insolvencies has skyrocketed while credit scores fall. To prevent these problems and improve credit, says Tahera Dudhwala, Editor of ThinkingMoney, consumers need to shop around for their financial products.
"Consumers need to be cautious about the credit cards and financial solutions they choose. An affordable interest rate is just one important feature. Zero interest on balance transfers and purchases for a certain time can save individuals a large sum of money, even if it doesn't seem like much at the time. Even two percent interest can add up to thousands quite quickly," says Dudhwala.
Consumers have numerous options available to them to help reduce their debt load and stay out of the financial trap many are finding themselves in these days. UK credit cards with a low or zero percent introductory interest rate is a great start.
To save money, consumers need to be wary when reading the fine print. Choosing a card with 15% instead of 21% interest can save money and eliminate the balance sooner, but yearly fees and usage charges can quickly eat any possible savings.
Many different UK rewards credit cards are available to help offset some of the costs. Reward or cash back cards return money to the consumer's pocket while charity cards send a percentage of the money spent to a non-profit organisation. Specialty solutions such as football or travel cards allow individuals to earn points on every GBP1 spent, which they can then use to acquire everything from airfare to clothing.
While financial experts do believe the recession is starting to ease, they feel its effects will hold on for many years to come. This makes it vital for Britons to select smart financial solutions and be wary of deals that seem too good to be true.
# # #