Research from the UK’s top discount brand has discovered that only a fifth of respondents understand the possible repercussions for missing a debt repayment.
The team at www.vouchercloud.com conducted the study as part of ongoing research into the financial habits of Britons. A total of 2,439 adults over the age of 18, all of whom stated they had at one point been in debt, either with a credit card, finance deal or loan, were quizzed about their knowledge of finances and debt.
Initially, all respondents were asked ‘When you took on the debt, did you fully read the terms & conditions?’ to which the majority of respondents, 63%, stated ‘no – not at all’. The remaining respondents stated either that they ‘started to read them and gave up’ (25%) or ‘yes – read them fully’ (12%).
Wanting to delve a little deeper and see how much the respondents understood about finances in general, all those polled were then provided with a list of financial statements and asked to state whether they believed each statement to be true or false. Once all of the results were collated, the top 5 misconceptions that Britons have about debt were revealed as:
1. If you ignore the company you owe money to for long enough, they’ll eventually go away and the debt will be forgotten / cleared – 42%
2. Once you declare yourself bankrupt, you are bankrupt for life – 39%
3. I’ll lose my home if I miss a mortgage repayment – 35%
4. All debt is bad for your credit rating – 33%
5. Banks will give you a mortgage based solely on how high your salary is – 27%
All respondents were then asked ‘When you initially took on your debt, did you understand the repercussions if you were to miss one or more payments?’ Only 27% stated that ‘yes’ they did, with almost half of respondents, 49%, stating that they ‘had a rough idea’ and the remaining 24% stating ‘no’ they didn’t understand at all.
Chris Johnson, Head of Operations at vouchercloud.com, commented:
“The results of this survey are, quite frankly, shocking. Not just the fact that Britons access credit without fully knowing all of the facts, or that we seem to be so blasé about being in debt, but also that Britons don’t understand the repercussions of what debt mismanagement can do to them and their future.
“Britons needs to educate themselves on all matters of debt, whether it currently effects them or not – because it might do one day. Credit cards, loans, mortgages, every type of debt, whether considered a good or bad, can land you in trouble if you don’t fully understand the legal agreement that you’re entering into.”