Website launches Debt Freedom Day
British employees must work for 70 days in order to repay the interest on credit card and loan debt, according to financial website Unbiased.
In order to highlight the growing levels of personal debt in the UK, today, Monday 10 March, has been declared Debt Freedom Day, as it marks the 70-day period (From 1 January until today), that is required to earn enough to pay off interest on debts.
Figures from the website showed personal loan levels in the UK have so far reached £9.8bn in 2008, up from £2.6bn last year. Meanwhile, average interest rates on personal loans are 0.5% higher than last year, resulting in Brits paying almost £1.5bn in interest payments. Personal debt levels in general increased by more than 10% over the last year and average levels of interest payable on this debt increased by more than 6%.
David Elms, chief executive of Unbiased, said: “This year’s Debt Freedom Day is a real warning for UK consumers – as it marks the day we start paying off the actual debt levels, rather than merely servicing the interest accrued. Compared to last year we will spend almost two months longer this year paying off the interest on our borrowings and this doesn’t event take into account mortgage costs.
“While Debt Freedom Day is of course a hypothetical point in the financial calendar, people should pay attention to it. In the current economic client is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.”