Research by uSwitch has revealed that many borrowers are failing to shut down other sources of finance and are instead spending, on average, in excess of £2,300.
Nick White, from the website, said that taking out an unsecured loan to consolidate multiple debts is not a quick-fix solution and should not be viewed as a green light to spend more money.
“Those who consolidate all their debt into a single loan should only borrow enough to cover all their debts and no more,” he stated.
Research which shows that two-thirds of all those who took out a debt consolidation loan in 2006 still failed to manage their money properly highlights the “overwhelming need” for good financial planning, said uSwitch.
This could help households save £160 or more every year in interest.
“These statistics highlight the need to educate consumers about effective debt management,” Mr White added.
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