Brits look to cut interest rates on debt

A growing proportion of UK consumers are taking control of their finances by seeking financial products for debt consolidation, according to the latest findings from Experian’s Credit Barometer.

Searches for balance transfer cards via Experian’s comparison services have risen in January, from 31% of the total credit card searches in December 2020 to 37% in January 2021. Likewise, there’s been an increase in interest for debt consolidation loans, rising from 34% of the total loan searches in December 2020, to 37% in January 2021.

January is traditionally the month when the highest proportion of people look to consolidate their debts, following their Christmas spending and New Year’s resolutions to get their finances back on track in the New Year. These findings suggest that this trend is continuing in 2021.

Encouragingly, eligibility for credit card products on Experian’s comparison services continued to increase to meet this demand. 71% of consumers saw a card they would be accepted for, compared to 61% the previous month. 46% of consumers saw a strong chance of seeing a loan that they would be accepted for, the same as the previous month.

Lenders continued to bring products to market, with almost double the number of credit cards available via Experian as there had been when availability was at its lowest, during the initial lockdown. This reflects growing lender confidence in the recovery of the UK economy and growing consumer demand.

Positively, two-thirds of Brits (62%) know they can check their eligibility for products before applying, without it damaging their credit score. However, understanding is lowest among the younger population, with just over half (51%) of those under 30 aware they can check their eligibility for financial products without a search harming their credit score.

Amir Goshtai, Experian Marketplace managing director said: “Financial resolutions come to the fore in January and many Brits will be seeking ways to consolidate debts, reduce interest payments and save money to take control of their finances. Encouragingly, we’re seeing credit availability continuing to grow, so people have more options from mainstream lenders.

“It’s positive to see the majority of Brits understanding they can check their eligibility for financial products before applying, without harming their credit scores. This is really important, as making repeated, speculative credit applications can reduce future chances of being accepted.”

Over half of the products offered in the loan (60%) and credit card (51%) categories in Experian’s comparison services also now have guaranteed rates, so applicants know exactly the interest rate they’ll get before they apply.