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Thursday, 23 October 2014

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Brits in the red until they’re dead

A third of Britons say they have fallen deeper into debt in the past year, with many never expecting to get back into the black.

Around 30 per cent say money they owe on credit cards, loans and overdrafts increased in the past 12 months. Of these, 10 per cent say their debts have risen a lot, according to financial website moneysupermarket.com.

The average person in debt owes £8,430, excluding mortgage repayments, with seven per cent of people believing that debt will always be part of their life.

Of those who owe money, 14 per cent repay the monthly minimum because most of them cannot afford to pay more, while four per cent pay as little as they can to free up more disposable income.

According to the website, people owing £8,430 on a credit card who only repaid the minimum each month would need around 24 years to repay the debt, although this includes £7,488 paid as interest.

Tim Moss, head of loans and debt at moneysupermarket.com, said: “The nation has been left reeling with inflation now at 4.5 per cent, the highest level since 2008, and the crippling effects of soaring living costs. It therefore comes as no surprise that people have seen a rise in the amount they currently owe, compared to 2010.

“It is vital credit card borrowers ensure the minimum amount at least is paid off each month, as a missing or late payment could result in the customer forfeiting their promotional rate or incurring fees as well as putting a black mark on their credit file.

“However, consumers also need to remember that by only repaying the bare minimum each month, they will end up paying through the nose in the long term and will shell out considerably more in interest than the original amount borrowed.”

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