Battling the ever-rising cost of living
It’s no secret that the cost of living crisis is affecting everyone in the UK, now more than ever. Many of us are worried about being able to afford the daily necessities of life, while potentially also thinking about managing our debts.
Many of us struggle with debt, particularly as interest rates can cost a fortune, your debt may be costing you more than you realise. A lot of us don’t know how much interest we pay on our credit cards, or even what that means in terms of real cash repayments.
To paint the picture a bit more vividly, did you know that:
- The average Brit has £3,745 of unsecured debt
- Paying the minimum payment on a £4,000 loan, at an interest rate of 44%, would take 32 years to pay off
- Meaning you’d pay more than £12,000 in just interest alone
Knowledge is power in these situations. It might sound simple, but the very first step is taking a look at your current interest rates, as well as how much you owe which will help you understand where to focus your energy.
That’s where debt consolidation can be a good option.
So, what is it?
Some of us have debts in all different forms, ranging from credit cards, overdrafts, personal loans, payday loans, and more - maybe you’ve even racked up a bit of debt on Buy Now Pay Later platforms. This type of debt is called an unsecured debt.
Debt consolidation is simple: you use one loan to pay off all of your other unsecured debts in one place, often at a lower rate. When consolidating debt, it’s critical to make sure that you are taking out a loan with a lower rate and you consider any repayment fees so you are sure that it will be saving you money.
When consolidating debt, it can provide some very welcome extra money in your pocket, but also have a significant positive impact on your mental wellbeing. Having one single debt, that is cheaper than you were repaying previously will be easier to keep track of, could get you out of debt quicker and helps give you control back over your finances.
Don’t just take our word for it. Connor, who works at EMR Ltd, says:
“The positive impact this has given me is being able to obtain a loan to wipe my credit report of all outstanding debts. This has in turn helped me to boost my credit score and feel the burden of debt lifted off my shoulder and I can finally see a route out of debt after years of struggling.”
Where does Salary Finance come in?
At Salary Finance we work closely with your employer to support your financial wellbeing. We do this by offering loans with more affordable rates, deducted directly from your salary, meaning we can accept more people, even those who might not have the best credit history.
Debt consolidation could help you save significant amounts of money, but it’s important to consider:
- The rates and fees. Always look at the interest rate and ensure that it is lower than what you are currently paying. Also consider if there are any fees related to paying off your current loan or any associated with the consolidation loan you are looking at taking on.
- The duration of the loan. If you access a lower rate - can you repay the loan quicker?
- The amount you would need to pay each month. Make sure you consider this and you can afford the repayments.
To help support colleagues, we have put together a handy guide to help you figure out if your debt may be costing you more than you realise.
If you then think debt consolidation is the right option right for you, we may be able to help you. Visit our website and select your employer for more information.