Workers' 45-day interest burden

Workers in the UK spend 45 days a year making enough to pay interest on credit cards and loans, say financial experts.

IFA Promotion, which supports the work of financial advisers, named Sunday, 15 February, as Debt Freedom Day and said people "need to start budgeting again".

It said the date was when the average earner will have made enough to start paying off what they owe, instead of just meeting interest charges.

The calculation was based on someone on the UK's average salary of £26,304.

'Borrow-to-spend'

It also estimated the average person owes £5,100 on a credit card and £13,700 on loans, hire purchase agreements and overdrafts.

It found someone with average debts will pay £2,280 in interest on loans and £939 interest on credit cards during 2004 if they are charged average rates of 15.21% and 14.26% respectively.

The total amount of unsecured debt owed by Britons is up by 51% since 2001, from £38bn to £57bn at the start of 2004.

David Elms, of IFA Promotion, said: "Clearly, as a nation, we're not fully aware of the profound effect this borrow-to-spend culture is having on our ability to save for the future, so through this hypothetical date we're hoping to get across a very real point.

"We need to start budgeting again, looking at all our income and expenditure, and how we're financing this."

'Clearer charges'

Earlier in February the UK credit industry was told by MPs to stop dragging its feet over reforms aimed at benefiting consumers.

John McFall, chairman of the Treasury select committee, has been angered by the failure of credit card providers to make their charges clearer.

In a letter to the Association of Payment Clearing Services (Apacs) Mr McFall asked if firms were "seeking to create obfuscation over these issues".

But Apacs denied there had been a "lack of commitment" by the industry.

The committee has called for the urgent inclusion of summary boxes in all customer account statements and credit agreements.

Summary boxes will outline terms and conditions in plain English and the length of time it will take to pay off debt if consumers make just the required minimum repayment.