The UK’s leading peer-to-peer lender Zopa has unveiled new research which highlights the spiraling debts engendered by credit card usage. Perhaps even more alarmingly, it would appear that the majority of Brits are in staunch denial about just how long it will take them to become debt free. We’ve summarized the key findings from the survey below:
Britain’s 30 million credit card holders have an average debt of £4,500, paying back at an average interest of 17.9%.
66% of credit cardholders are paying monthly interest on their balance, with one in five choosing to pay only the minimum amount each month.
By paying off only the minimum amount each month, it can take users up to 17 years to rid themselves of the average debt of £4,500. Borrowers can end up repaying more than double their original debt.
55% of credit card holders in the UK don’t even know the interest rate on their credit card balance.
Many Brits unrealistically believe themselves able to pay off their current credit card debt in an average of just 3 years and 11 months.
Less than 3% of borrowers expected to spend more than 16 years paying off their credit card, while only 13% expected the process take more than a decade.
61% of users admit that their credit card debt is unmanageable.
Giles Andrews, CEO and Co-Founder of Zopa, commented:
“Everyone should be aware of their ‘debt age’, and understand more about how long it will take to pay off credit card bills or loans under their current situation.
“By paying just the minimum interest on their credit cards, Britons are becoming part of a debt age crisis. Consumers could end up still paying off existing their credit cards even when they are collecting their pensions.”
“Zopa is empowering borrowers to tackle their debts head on in order to become debt free much sooner. By offering borrowers rates typically less than half the purchase rates of their credit cards, Zopa allows people to side-step the banks and credit card companies and pay less interest in order to get debt free sooner.”
Zopa has created a video to highlight the debt age issue. Using prosthetics and make-up, the platform has dressed up users to look the age that they will be when they finally clear their credit card debt. You can watch the video .