Rising interest rates on revolving credit, including credit and store cards, set to cost Britons another £2.8bn – London Business News

The lender found that 12.7 million homeowners could be affected by an annual increase in interest payments on their credit cards, store cards and overdrafts of more than £750 over the coming year.

Research by YouGov found that 3.8million homeowners are already feeling the pinch, as the average cost of interest on their revolving credit has risen by more than £60 a month in the last six months alone.

This means they could spend an additional total of £2.8billion on revolving credit interest payments next year.

Laurence Morey, CEO of Pepper Money, said, “We know that with rising costs, the monthly commitment to repay short-term debt such as credit cards, store cards and overdrafts can stifle the ability of many families to meet their monthly expenses. , especially when the cost of that credit also increases.

“We also know that, under the right circumstances, consolidating expensive short-term credit into a longer-term loan at a lower rate can help give families greater control over their cash flow, allowing them to normalize their finances as they repay. reduce this credit in the longer term.

“At Pepper Money, we regularly undertake a thorough analysis of our clients’ changing circumstances after discussing a Pepper Money Homeowner Secured Loan to ensure we are fulfilling our mission to help our clients succeed, and data shows that the debt consolidation loans we advance are to hard working people with good credit scores and good incomes.

“For example, the median salary of our homeowners loans clients is £54,000, which compares to the UK ONS median average salary of £31,000. Often these people have accumulated large balances over a long period of time and they take proactive steps to normalize their situation.

“By doing so, they often improve their credit profile, and we see an increase in average credit scores over the period after taking their consolidation loan.

“They also do this while maintaining a comfortable reserve of equity in their homes. The average LTV on our second charge loans is just under 70% when taking into account their existing first mortgage.

“It’s an option that is already helping many responsible families take control of their finances and we see it becoming even more important over the next year as interest rates on revolving credit continue to rise and that the pressure on the cost of living continues.”

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