Debt consolidation loan a 'smarter way' to save - 02/01/2008

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Some £605 could be saved by the average UK household over a three-year period by consolidating their debts into an unsecured personal loan, according to new research from uSwitch.com.

Mike Naylor, a personal finance expert at the online price comparison and switching service, suggested that consumers in debt should "act now" to take on a debt consolidation loan while the option is still available.

"People have enjoyed easy access to cheap credit for quite some time, but for some, the party really could be over," he said.

Mr Naylor added that although an unsecured loan to consolidate debts may be "a safer bet" than paying them off individually, it is also important for consumers to pay attention to other areas where they may accumulate debts.

"Consumers must make sure they close down other existing forms of credit to avoid the temptation to rack up these debts again - otherwise any saving will be wiped out," he said.

According to Credit Action's debt statistics, the average household debt in the UK currently stands at £8,920, excluding mortgages.

Including mortgages, the figure rises to £55,877, with personal debt in Britain increasing at a rate of £1 million ever four minutes.

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