Credit card debt could fall by two thirds if government plans for a national financial advice service are implemented, the Resolution Foundation has claimed, as the Thorsen review into granting generic financial advice free of charge begins.
Getting better advice on how to use their money would help British consumers slash credit card debt from £2.5 billion to £830 million nationwide and eliminate £2.2 billion in other unsecured debts, the foundation believes.
According to its calculations, informed customers would turn to savings, investments and pensions instead.
With just ten per cent of low earners in the UK - 1.5 million people - changing their ways, pensions premiums would increase by £560 million and medium-term savings contributions by £1.5 billion.
Otto Thoresen, who is heading the government review, has promised to devise "a blueprint for how a national approach to generic advice can be delivered".
The free advice service was proposed by Treasury minister Ed Balls earlier this year in response to rising alarm about UK debt levels and financial exclusion.
UK consumers currently borrow £360 million a day, according to the latest figures from Credit Action.To learn more about debt advice, click here.
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