More than two-thirds of Britons have at least one credit card, which isn’t necessarily a bad thing, but it is a concern when you find that the average outstanding credit card debt in the UK currently stands at huge £3,256.

Abbey has found that less than a quarter of the nation’s total credit card debt is currently on a 0% deal, which means Britons are needlessly paying out more than £9 billion pounds in credit card interest each year. The biggest problem with unsecured debt is the rates of interest – if you can barely keep up with the high rates, the chances of reducing your debt is small.

Abbey also found that while 36% of credit card holders have no existing debt or pay off their balance in full each month, more than 40% of people have held their credit card debt for over a year and more than one in five for over four years. The longer you have unsecured debt, the greater the rate of interest the greater the chance of slipping into costly arrears.

Callum Gibson, head of Credit Cards at Abbey, comments: “By transferring an outstanding credit card balance Britons could save an average of £443 a year, a huge cost saving in today’s difficult economic climate.”

One way of transferring the debt is to consolidate it by using the equity in your home. Credit card debt is bad debt because the rates of interest are high and the repercussion when defaulting are harsh. Using the equity in your home means you could reduce your repayments by a huge amount and you will be safe in the knowledge that you only have one debt to worry about.

SOURCE: Abbey, 13/03/09

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