Millions Try To Find Way Out Of Debt Crisis

As many as one in seven adults has turned to debt consolidation in the past three years to try to get their borrowing under control. Millions have taken out unsecured loans or remortgaged their homes in an attempt to put their debts in one place. In Scotland, the average loan taken out to cover previous debts was £14,439 – among the highest in the UK.

A survey by the price comparison website MoneyExpert.com, which spoke to more than 2,500 adults across the UK, shows that 36 per cent of those consolidating debts took out an unsecured personal loan, while 15 per cent chose to transfer their debt to a zero-rate credit card.

A sizeable chunk – 18 per cent – opted to add to the cost of their home loan by remortgaging.

Edward Dickson, a financial adviser, said: “If you must consolidate your debt, the most sensible option is to go through your existing mortgage as opposed to through independent companies, simply because you will get a much better rate.”

Research indicated that up to 360,000 people – some 6 per cent of consolidators – took out a loan of at least £50,000.

Sean Gardner, the chief executive of MoneyExpert.com, said: “The UK’s debt crisis is a serious concern and borrowers are starting to feel the strain. Debt consolidation is entirely sensible and a good way to get your finances under control if you owe money to different lenders at varying rates of interest.

“However, it only works if you accept consolidation is a wake-up call to get your borrowing under control and then work to become debt free. There has to be concern that many people simply see consolidation as a way to keep on borrowing.”

Graeme Lobban, an independent financial adviser, warned that debt consolidation should be viewed as a last resort.

“You should only consider consolidating your debts if your back is really up against the wall and you’re facing serious court proceedings,” he said. “Unfortunately, it has become far too easy for people to consolidate their debts through various companies and people are seeing it as an easy solution, a quick fix, which of course it definitely isn’t.”

765,000 shopaholics spend, spend, spend

Women have always loved to shop, but a new survey published today reveals just how much, with the number of hard-core shopaholics in Britain now exceeding three-quarters of a million.

The survey by uSwitch found a stark contrast between the average British woman who shops just 2.4 times a month and shopaholics who have to have a weekly fix.

There are now 765,642 shopaholics in Britain indulging themselves monthly to the tune of almost £200, compared with the average fashion spend of almost £90, the new research claims.

The survey also revealed that almost 500,000 British women admit to sneaking fashion buys on to their partner’s credit card, while 16 per cent said they lied about their spending.

Shopaholics now have an average personal shopping debt of £8,092.97, meaning they are collectively in debt by a massive £61.96 million. The typical shopaholic has £11,337 in total unsecured debt, which is £6,270 more than the average British woman, according to uSwitch.

Its director of consumer policy, Ann Robinson, blamed the country’s obsession with celebrities and people trying to copy their lifestyles. She said:

“In today’s celebrity-obsessed society, where women emulate the lifestyles and shopping habits of their favourite fashionistas, it is not surprising that women are becoming more interested in ‘size zero’ than zero per cent APR.”

The research gives a profile of the shopaholic as someone who

tends to be under 25, earns around £18,959 a year, spends 14 per cent of their disposable income on fashion and can be found mainly in cities including Glasgow and Edinburgh.

For the study, a shopaholic was defined as someone who has 50 per cent or more as a proportion of their unsecured debt attributable to fashion purchases.

The research was conducted by YouGov earlier this month among a representative sample of 2,118 adults.