A survey by peer to peer lending company Zopa has revealed the shocking truth behind Britain’s rising mountain of credit card debt. In a poll of 1,000 British credit cardholders, Zopa discovered that many people are firmly in denial when it comes to how long it will take them to pay off their plastic card balances.
Key credit card facts
The survey found that:
- The average credit card debt is around £4,500
- Two thirds of cardholders are paying interest on their balances, with the average interest rate being 17.9%
- About 20% of people polled are paying only the minimum amount each month
- This means it could take them as long as 17 years to repay a £4,500 debt – and they’ll end up paying off more than twice their original balance
Perhaps the most worrying finding of all is that more than half (55%) of the cardholders surveyed have no idea what the interest rate is for their credit card accounts.
What’s your debt age?
‘Debt age’ is the length of time that it will take you to become free of your debts if you maintain your current repayment levels. The findings from the Zopa survey show that the majority of British consumers simply don’t know how long it will take them to pay off their debts.
Just 3% of respondents thought it would take them longer than 16 years, whilst only 13% thought it would take them more than a decade. But as the figures shown above show, people who only make the minimum payment on a credit card balance of £4,500 could be paying it off for a whopping 17 years. And when you consider that many people owe much more than that, the timescales involved become even less palatable.
Giles Andrew, Zopa’s Chief Executive warns that: ‘By paying just the minimum interest on their credit cards, Britons are becoming part of a debt age crisis. Consumers could end up still paying off existing their credit cards even when they are collecting their pensions.’
Zopa has actually produced a video to show the effects of 17 years of debt on a group of consumers. Using makeup and prosthetics, several cardholders are ‘aged’ by 17 years so they can see what they might look like when they finally clear their debts. You can watch the video here.
Zopa also asked credit card holders about the levels of stress and worry they experience from being in debt. The findings don’t make pleasant reading:
- 61% of people polled feel their credit card debt is ‘unmanageable’
- 26% are ‘overwhelmed’ by their debt situation
- 14% ‘worry constantly’ and 20% are kept awake at night by their debt problems
- 18% reported problems with friends and family as a direct result of credit card debts.
Andy Gorton, Managing Director of leading debt advice firm Bankruptcy Clinic, comments: ‘These statistics show the toll that debt can take on your life if you don’t take action to regain control of your finances. There’s really o need to sacrifice 17 years of your life to paying off credit cards debts – there are other, better ways for you to get on top of things. Bankruptcy Clinic is here to help you find the right solution for your circumstances.’
About Bankruptcy Clinic
As the name suggests, Bankruptcy Clinic is a specialist advisory service for people who are considering bankruptcy as a way of dealing with their debts. However, we also offer a range of other options to suit different debt levels and situations. These include informal Debt Management Plans, legally-binding Individual Voluntary Arrangements (IVAs) and Protected Trust Deeds (PTDs), and Debt Relief Orders (DROs).
In most cases, any of these options could help you become debt-free in just a few years. Of course, there are drawbacks and advantages to each solution and it’s vital that you choose the right option. That’s where Bankruptcy Clinic’s expert advice service comes in. Our fully-trained and qualified advisers will take the time to understand your individual situation and provide all the guidance and support you need to start managing your debts effectively.
Start your journey today
The sooner you contact Bankruptcy Clinic, the sooner your journey to becoming debt-free can begin. So get in touch with us today:
- Call free on 0808 168 7389 or call 01625 462 770 from a mobile.
- Email us at firstname.lastname@example.org.
- Enquire online here.
We look forward to hearing from you soon.