Briton’s Slashing Debt

Although personal debt in the UK has soared to over £1 trillion, borrowing no longer appears to be out of control.

Slowly but surely, it seems we are finally getting to grips with our spending and borrowing habits. In particular, the signs indicate that we are becoming more responsible with our credit cards.

However, a third of us still run out of money prior to pay day. This explains the trend over the last few years of using numerous credit cards to keep things ticking over until the pay cheque comes in.

On average we are charged £27 by banks and building societies every time we are overdrawn. Similar charges are levied by UK credit card issuers every time we misuse our cards, such as late payments or spending beyond the cards limit.

Andy Deller, of Egg, which recently carried out research concerning personal debt, said: “A staggering 16 million Brits’ run out of cash each month and resort to expensive overdrafts to make it through to pay day.

“You can easily slip into the red if you don’t have clear figure of what you can afford to spend,” he said.

On top of that, we tend to overdo the plastic when we find our salary doesn’t stretch. But it seems we are finally getting the message that credit cards can be the most expensive form of borrowing.

So cards are out of fashion as we realise that it is cheaper to either add our debts to our mortgage or take out a low interest consolidation loan. We are also taking advantage of credit card deals that offer very rates on interest for the life time of the balance.

All of this has resulted in consumers making inroads into the sky-high levels of credit card debt.

The British Banking Association recently released figures that show outstanding debt on credit cards fell by £146m to £33.8bn in August. Last month we actually paid more to our credit cards than we spent on them.

Nick White of uSwich.com said:” Clearly consumers are starting to make an effort to bring their debt under control.

“They are realising they cannot keep spending as they have been – they need to do something to reduce their debt.”

According to uSwitch.com, last month nearly a fifth of credit card holders opted to pay off their balance in full each month.