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When will you celebrate a debt-free birthday?

There’s s been lots of media coverage of the report Zopa commissioned from the Centre for Economics and Business Research, which found that the average Brit will be debt-free at 69, 12 years later than they expect.

While consumers expect to be free of unsecured debt (e.g. credit card, loans and store card balances) and mortgage liabilities by 57, this unfortunately seems to be unrealistic.

In fact, Britons are likely to be 64 by the time they are free of unsecured debt and 69 if you include mortgages. Indeed, the average 55-64 year old today still has £29,100 of debt.

Total average debt in the UK by age group and when they will pay it off

How Zopa could help

For instance, by consolidating their debts with Zopa, the average household could pay off their unsecured debt up to 21 weeks (4.8 months) sooner if they consolidate through Zopa.

The average person owing £4,100 in unsecured debt could clear their debts within five years and save up to £97 per year . Younger people could save even more, with the average annual saving for 25-34 year olds being £475 per year followed by £210 for those aged 35-44

Giles Andrews, Executive Chairman and co-founder of Zopa, comments: “Over the past 10 years we have helped over 46,000 people consolidate their debt by helping them get debt free. Due to our flexible repayment policy, our customers typically pay off their loan within four years; so many consumers could be debt free by the 2020 Olympics if they take action now. By consolidating any existing debts your monthly repayments will be easier to manage, will take less time to clear, and you could save money by switching to a lower rate of interest.”

Youthful optimism

Despite having the most unsecured debt and owing £14,200 on average, today’s 18-24 year olds are the most optimistic anticipating an unsecured debt free birthday of 38. However, they are unlikely to be free of unsecured debt until the age of 66 if they do not become homeowners and 74 if they do. Worryingly, almost half of 18-24 year olds (49 per cent) do not know what debt consolidation is. This is something we hope to educate more people about to help them tackle their debt.

Where you live

Regionally, the debt-free age varies greatly. Those in the North East can expect to become debt free the earliest at age 57 as they tend to buy homes younger and have less unsecured debt. Londoners, however, can assume they will be waiting up to twenty years longer until age 77; as despite higher incomes, they take on more unsecured debt and acquire mortgages later.

Worrying about unsecured debt

Paying off unsecured debts is a struggle for almost three in ten (27 per cent) Britons and a quarter (24 per cent) admit that because of their debts, they are afraid of what the future holds. A further fifth (21 per cent) have sleepless nights thinking about their debt and a sixth (15 per cent) is afraid to answer their door or phone because of their creditors.

Even with such repayment concerns, only a quarter (24 percent) has sought to consolidate their unsecured debt despite the savings potential.

Read the full report to find out more.