An increased number of Brits are now turning to Consolidation as a means of Debt Relief

As a nation struggling to manage our finances, it is estimated that approximately 6.5million of us here in the UK are turning to the idea of consolidating our debts.

Figures from MoneyExpert.com show that over the last 3 years some 14% of Brits have taken the opportunity to consolidate their debts as a way to bring their borrowing and spending habits under some kind of control. Their research also shows that 1.29million people have consolidates debts of as much as £20,000 or more. This figure is the result of an accumulation of overdrafts, credit/store cards and loans.

The trend is that it is the younger age group who are taking the decision to transfer their debts to the one lender, with 23% of all 25-34 year olds taking part in the study having already taken steps to consolidate their debts.

Furthermore, figures show a sharp increase over the last 6months in the demand for secured loans. Those among us choosing this option more often than not secure the loan against our own homes. Since October 2007, applications for homeowner loans has increased by 85%.

Chief Executive of MoneyExpert.com, Sean Gardner is encouraged by so many people being proactive in trying to manage their finances. He hopes these people can see for themselves that, in many cases, there can be significant savings to be made by moving all your debts to the one place. He says,“With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving.”

Mr.Gardner does add one word of warning though, and that is to view consolidation as a means to tackle debt problems and an attempt to get them under control. He strongly advises against repeating consolidation on any regular basis.

As with all financial advice/matters, one must always read the fine print and be aware, as Head of Personal Finance at Fool.co.uk tells us, that around half of all consolidation loans carry a penalty for early settlement.