Borrowers pile on the debt
A survey released today by price comparison website Uswitch has shown that more than one in four people who took out a debt consolidation loan last year went on to borrow more cash.
Almost a third of the personal loans agreed in 2007 were for debt consolidation, 1.3m in total, of which 26% went on to rack up further borrowing worth an average £2,221.
The report said 6% of people who took out an unsecured loan got in to trouble and were forced to borrow more cash to keep up with repayments on existing debts.
The YouGov poll for Uswitch also found that 85% of those taking out debt consolidation loans had not been asked by the lender about closing other debts.
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It called on the banks to give clearer warnings about not paying off existing debts.
"The potential profits have clearly been too good to resist," said Uswitch personal finance expert Mike Naylor.
There are concerns that more borrowers could begin to miss payments as the credit crunch continues to bite.
