A recent survey carried out in the UK has shown that around a quarter of those that take out consolidation loans in order to repay other debts off actually manage to clear their debts off early. The survey was carried out by a financial website, which showed that around 25% of those taking out a consolidation loan to get rid of their smaller, higher interest debts were managing to get themselves out of debt earlier than they may have done otherwise.
Another financial service recommended that those planning to take out a consolidation loan to clear expensive credit card debt should the ensure that they close their credit card accounts rather than just cutting up the cards, as this decreases the risk of spending on the cards again, running up a high balance, and being left with both credit card debts and the consolidation loan that was taken out to clear them in the first place.
The recent report also highlighted the problem with debts levels in the UK at present, indicating that often consumers only realized that they had a debt problem when they were no longer able to keep up with repayments on financial commitments. An industry expert stated that consumers were struggling with a wide range of debts, particularly following the series of five interest rate rises over the past year, but mortgage repayments in particular were proving to be a huge problem for struggling borrowers.
It seems, however, that it is not all doom and gloom, as one building society found that the level of assets and savings in the UK far outweighed the level of debt, with the total value of assets and savings coming in a four times that of mortgages and debts. The report did point out, however, that the distribution of assets and wealth were mainly in the South East of England, the South West of England, and London.
Officials have commented that consumers need to be more aware of their debts, and should try and deal with them more effectively rather than wasting their money on over spending. As reflected by the figures, many consumers have found that debt consolidation is an effective way to reduce the strain of dealing with debt, providing further debt is not accrued once the original ones have been consolidated.
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