Abacus Daily Debt News

January ‘busiest time for debt consolidation’

The start of the new year is the busiest time for people taking out personal loans to consolidate debt and apply for debt management plans.

Sainsbury’s Finance, which has just reduced its online personal loan deal to 8.1 per cent typical APR, has noted that January is a peak time for people seeking to clear their debts.

The company stated that it offers one of the most competitive deals currently available on the market, with the new rate applying to loans of between £7,000 and £25,000.

“Debt consolidation is always a good idea if you have multiple sources of debt, maybe a store card and credit card or a historical loan,” commented Steven Baillie, the head of loans at Sainsbury’s.

He added that consolidating non-secured debt using one of the firm’s loans “could save you hundreds”.

Meanwhile, several high street banks have announced they will no longer offer single premium payment protection insurance alongside loans.

Abacus Comment:
We do not agree that “Debt consolidation is always a good idea”.

Sometimes? Yes, always? No.

What about if the debts are growing  year on year and the debtor is consolidating for umpteenth time? If  no one ever took out a consolidation loan then they would be fewer people with debt problems in the UK today.

Consolidating debts into one loan gives debtors less room to negotiate should they fall into arrears. This  means a debt management plan or IVA is no longer an option.