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This week marks Talk Money Week, where providers and debt charities have come together to help people open up about their financial situation. It seems this is highly needed, as well, as research from Arrow Global has found only 19% of Brits seek out debt advice, despite it being free.
To manage your money effectively, it can be beneficial to heed the words of experts – such as can be found on this site. And yet, when it comes to asking for advice, 46% of consumers said they don't need it, while 28% look only to their friends and family.
Not talking about your finances, especially if you're struggling with debt, could be a recipe for disaster. Indeed, many people in debt feel out of control of their finances, which is exactly why debt charities exist.
Sticking your head in the sand when it comes to debt can have dire consequences for your credit rating, among other things. An expert would be able to tell you this and help you minimise any detrimental impact on your credit score as much as possible. They would also be able to help combat any misinformation, with the survey finding that 27% of consumers didn't know a missed debt repayment can have a negative impact on your credit rating for up to six years.
Even just getting your credit report can help you understand your financial situation better, yet while 56% have checked their credit rating using one of the free credit report services available, 70% said they only did so out of curiosity and didn't take further action as a result.
Our guide on improving your credit score could be a big help.
Credit cards are the most common source of debt, reported by 45% of survey respondents. Missing a payment on card debt could not only decrease your credit rating, but if you have a 0% interest deal, you might lose this introductory offer instantly, which could result in a large interest rate that you would then be unprepared to pay off.
Speaking of interest, 31% of respondents said they are unaware of how much interest they are paying on their credit card, while almost half (47%) of those with student loans are equally unaware and 41% of those with an overdraft don't know what they're adding to their debt every month.
"Our research reveals there is a worrying lack of awareness among consumers when it comes to the interest rates they are paying on their debts … we're concerned this is potentially storing up debt problems for the future," commented Lee Rochford, Group CEO of Arrow Global. "Financial awareness is critically important for all consumers and will help ensure consumers manage their finances in a responsible and affordable way."
If you're dealing with card debt, you may want to get a 0% balance transfer card to give you some time to pay it off without interest adding to it. For other or larger types of debt, you may want to consider a personal loan for consolidation purposes – but if you're not sure what to do, there should be a debt charity such as Citizens Advice or StepChange nearby that can offer some helpful and free personalised advice.
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