Almost a third of over 50s owe money on credit cards, overdrafts and personal loans. Here's how to clear debt as cheaply as possible.
Nearly six million over 50s are in debt, owing an average of £12,000 on top of their mortgages, according to financial firm Saga.
Its survey of over 50s found that 29% are currently repaying debts outside of their mortgage with the majority owing thousands on credit cards.
The average debt was £12,218, but women tend to be more indebted than men with the average woman aged over 50 owing £15,148 compared to an average £9,739 for men.
Saga found that most people borrowed in order to pay for something they wanted but couldn’t afford, but worryingly 21% are going into debt in order to pay their household bills.
Not all debt is problematic
The company noted that many of the people surveyed were going into debt for sensible reasons, like using 0% finance deals to spread the cost of big purchases.
For example, one man explained how he used a 0% new purchase credit card to pay for his home, car, travel and pet insurance and then cleared the balance over 12 months.
Of those who are in debt, 60% said they could afford to repay their debts and still live comfortably, but almost a third (29%) are struggling with their repayments.
Pay no interest on new purchases for up to 27 months
Getting debt under control
If you have built up debts you are struggling to repay there are a number of things you can do in order to regain control.
The first thing to do is reduce the interest you are paying on your debt. At the moment there are a number of fantastic 0% interest deals on balance transfer credit cards.
These cards allow you to move existing credit card debts onto one card then pay no interest for a period of time making it easier to clear the debt.
Halifax has the longest 0% deal at 41 months, but it has a hefty 3.44% balance transfer fee. Both Lloyds and Bank of Scotland offer 40 months interest-free with a more manageable 2.39% fee, so chances are this will work out cheaper overall.
If you think you can clear your debt more quickly, you could potentially avoid the balance transfer fear altogether: Halifax has another balance transfer card offering 0% interest for 25 months fee-free. Take a look at other low-fee options in our tables.
If your debts take the form of a personal loan or overdraft you may still be able to move it onto a 0% credit card. You need to look at 0% money transfer cards.
These credit cards allow you to transfer money from the card into your bank account so you can repay overdrafts or loans. Virgin Money has a credit card offering 0% for 32 months on money transfers with a 1.69% fee.
Once you’ve moved your debt onto a 0% card try to clear the debt before the interest-free period runs out. If you can’t manage that make sure you move the debt onto another 0% deal when the first one runs out otherwise you’ll find the interest rate rockets upwards.
More drastic steps
If you are over 55 you are allowed to take up to 25% of your pension pot tax-free, meaning you could use some of your pension pot to clear your debts.
You could also look at taking some money out of your house via equity release.
This is where a company either buys a percentage of your home, or lends you money against your home, without having to mover or sell. However, given the costs involved this should generally be considered a last resort.
If you are worried about your debts there are several charities that can help you work out how to tackle them. Try speaking to National Debtline, Citizens Advice or Step Change.
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