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PRESS RELEASE
OUR £100-BILLION-A-YEAR DEBT HABIT COULD END IN TEARS! Today's "Lending to Individuals: June 2003"* figures from the Bank of England make for scary reading: at the end of June 2003, Britons collectively owed a colossal £878 billion - and our debt keeps growing every month. This figure is made up of £714 billion in mortgages and £164 billion of consumer credit (unsecured loans and plastic cards). What's even more worrying is that, in the first six months of this year, our total debt increased by over £50 billion. At the moment, we're on target to increase our overall borrowing by an astonishing £100 billion during 2003. That's almost four times what the government aims to borrow this tax year (estimated at £27 billion)! However, multi-award-winning personal finance website The Motley Fool (www.fool.co.uk) suggests two ways out for over-spenders. Bruce Jackson, Managing Director and co-founder of The Motley Fool UK, reckons that most of us could easily save a fortune by shopping around for better deals. Bruce remarks, "As a nation, we're paying around £36 billion a year in interest on our mortgage debt**. By re-mortgaging or winning improved deals from their existing lenders, we reckon that most borrowers can cut the interest rates they pay by around 1.5%, saving around £10.7 billion a year (1.5% of £714 billion). The Motley Fool website (www.fool.co.uk) has a re-mortgage area explaining how to do it and how simple it is to switch." "What's more, our non-mortgage debt of £164 billion, shared between 21.7 million households, comes to over £7,500 per home, but many problem borrowers owe far more. Interest rates on this debt are typically around 15%, which means that easy credit is costing us around £24 billion a year in interest." "One great way to defeat credit card debt is to switch to one of the dozens of cards offering an introductory rate for balance transfers, typically 0% for six months. Use this breather sensibly by paying off as much as you can every payday and, if you can, keep switching until your debt is gone. If you want to get the best out of your cards, treat them as a useful convenience, but don't ever borrow money on them at standard rates. They're just too expensive." Bruce concludes, "Clearly, if we keep on borrowing over £100 billion a year, it will all end in tears. We need to do everything we can to manage our household budgets sensibly and learn how to minimise our debt burden." - ends - Contact Information NOTES TO EDITORS *Bank of England's "Lending To Individuals: June 2003" can be found at: http://www.bankofengland.co.uk/mfsd/li/030729/lendind.pdf **Based on an average interest rate of 5%. (5% of £714 billion = £35.7 billion) About The Motley Fool The Motley Fool's mission is to tell people the truth about finance, helping them to take control of their money and make better financial decisions. Launched in 1997 and still one of the UK's most popular personal finance websites, www.fool.co.uk had over 16 million page views in June 2003, and has more than 200,000 visitors every month. The site has won numerous awards, including: The Motley Fool has published a dozen books in the UK. Its best-selling UK Investment Guide has sold over 200,000 copies and was recently published in its third edition. The Motley Fool's latest book is a popular guide to female financial fitness, A Girl's Best Friend Is Her Money. Also, The Motley Fool is running a series of evening 'money makeovers' for women and, in order to meet demand, the next Taking Control of Your Money workshop on 2 October will be twice the size of those held in May and June. For more details, go to www.fool.co.uk/women.
Bruce Jackson, Managing Director, The Motley Fool UK
E-mail: BruceJ@Fool.co.uk
Phone: (020) 7663 3665
Fax: (020) 7663 3700