Despite worrying levels of debt, almost half (46%) of consumers claimed that they did not need any advice, according to a report published by Arrow Global.
The Debt Britain report further found that 28% of consumers turn to family and friends for advice, while just one in five (19%) said they have taken advantage of specialist free advice from debt charities and organisations.
Arrow Global cited that the findings could explain why many people find themselves in debt can feel out of control with a detrimental impact on their credit ratings.
Illustrating this, just over a quarter of consumers admitted they were unaware that a missed debt repayment could adversely impact their credit rating for up to six years, while a further 25% though that a missed payment could stay on their credit file for less than six years.
The most common source of debt was an outstanding credit card balance reported by 45% of consumers, with an average balance of £5,960. However, 31% of consumers were unaware of the interest rate they were paying on the debt. Research revealed that by only paying off the minimum balance each month on a credit card loan of £3,0000 at 17.9% APR, it can take up to 27 years to clear the debt.
Arrow Global group chief executive Lee Rochford commented: “Our research reveals there is a worrying lack of awareness amongst consumers when it comes to the interest rates they are paying on their debts. With just 19% using free debt advice and 46% of consumers thinking they don’t need to seek advice, we’re concerned this is potentially storing up debt problems for the future.
“Financial awareness is critically important for all consumers and will help ensure consumers manage their finances in a responsible and affordable way. For those who do fall into debt arrears, we work with a number of debt charities and organisations such as StepChange, Citizens Advice and National Debtline, to ensure that customers who need advice are signposted in the right direction.”
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