Tracking interest charges could improve Millennials' debt situation
A new report has found that Millennials are not paying enough attention to interest rates. 28% of 18-24 year olds don’t know what APR means, while a further 38% say it has little or no importance. As debt levels continue to rise among young people, changing this may prove an effective way to avoid the worst consequences of problem debt.
A generational concern?
While it may seem unfair to point specifically at Millennials, recent data suggests that this age group is most at risk. Arrow Global’s 2018 Debt Britain report revealed that 40% of 18-24 year olds and 46% of 25-34 year olds have increased their overall debt levels in the last five years. That compares to just 20% of over 55s.
Meanwhile, the National Audit Office (NAO) has found that struggling with debt repayment can lead to more severe consequences. Those who are finding it tough to pay off debts are more likely to end up in social housing and to suffer from mental health issues.
The good news for Millennials is that studies also suggest they can draw on existing, positive habits to improve their lot. The Debt Britain report found that 69% of 18-24 year olds and 70% of 25-34 year olds believe repaying debt on time is ‘very important’. So debtors may use this instinct to do a little more when the debt is due.
Interest rates may also change due to lapses in special offers or wider changes like the Bank of England raising interest rates. By regularly monitoring interest rates, it’s easier to track whether repayments are actually reducing overall debt. It may even help those in debt seek out better deals.
For those debtors who are struggling to understand their interest rates and repayments, it’s important to seek help. Charities and government services like StepChange, Citizens Advice and the Money Advice Service can all help with these issues: and contacting them early may help avoid problem debt.
The NAO also expressed concerns that debt repayment plans are becoming unaffordable. When this is the case, debtors should contact their creditors to raise their concerns. This is as true of Dukes Bailiffs as of any creditor, so if you’ve received an enforcement notice and want to discuss affordable repayment plans, please contact our team today.