Are you spending thousands more on your loans than you need to?

Sad young woman counting bills sitting at desk in home office
Sad young woman counting bills sitting at desk in home office

More than half a million Brits are paying more interest on their debts than they need to, with the average amount wasted a whopping £1,134 a year.

Almost five million British adults owe amounts of between £7,500 and £25,000 - and TSB calculates that more than half a million of these could, if they wanted, move to a personal loan with a much lower interest rate.

Instead, by staying on their current credit agreements, they are wasting £55 million a month, paying three times more interest than they need to.

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"The consumer credit industry offers people a helping hand when they need it most but it is important that people know all of the options available to them to find the best deal for their needs and be able to borrow well," says Nick Smith, head of loans at TSB.

"However, our research shows that people shouldn't stop shopping around for better deals even after they have committed to borrow. We urge people to continue to take just 30 minutes out on a regular basis to review their debts as they may be one of the half a million Brits eligible to refinance to a cheaper deal, and pay less for their debts, which will help them become debt free sooner."

Payday loan complaints more than triple

The problem, apparently, is that we don't like facing up to our problems. While 13% of consumer credit borrowers simply don't know their options, half admit to preferring to bury their heads in the sand and actively avoid thinking about money.

But it's an expensive thing to do, with these 'Ostriches' paying more than other indebted Brits – on average, £200 more a year. They are paying considerably higher interest rates than others - 14% APR rather than 10%.

£576m in payday loans to pay for funerals

"Burying your head in the sand about debt won't make it go away – and it can end up costing a lot more than you bargained for," says Smith.

"We encourage borrowers to understand how much they are paying and for how long so they can consider their options. There is plenty of information available online and on money advice websites as well as specialist charities to help people review their finances and seek out better options."

One of the best bets for a cheaper loan is a credit union, which will give much the same service as a payday loan - but at a much better rate, as there's a cap on the maximum they can charge. There's more information from MoneySavingExpert here.