Despite record breaking 0% purchase deals on credit cards, 89% of borrowers would choose a more expensive option when financing their new bathroom, costing them an average of £795 over 2 years1.
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· The good news: 9 out of 10 home owners are choosing to save before undertaking home improvement projects.
· The gender divide: Women are more likely than men to make a credit-savvy decision when buying a new bathroom by putting the purchase on a new 0% purchase credit card.
· The age gap: The young trump the aged, with 25–34-year-olds most likely to borrow at 0% interest. The over-65s, however, are the most likely to borrow using a personal loan or existing, interest charging credit card.
· Geographically speaking: People in Scotland are more likely to end up paying interest than those who live in any other part of the British Isles. The Welsh, on the other hand, are the most likely to avoid interest charges over the course of their borrowing.
· It’s an avoidable expense: A quick check with the simple-to-use TotallyMoney.com Cheapest Way to Borrow Calculator (http://www.totallymoney.com/cheapest-way-to-borrow-money/) can reveal the most cost-efficient way to borrow up to £10,000 and could save the UK a fortune in avoidable interest charges.
Strictly embargoed until 00:01, Friday June the 20th: New research released today from credit comparison website Totallymoney.com reveals that the vast majority of UK home owners who are buying a new bathroom are wasting hundreds of pounds in loan or credit card interest charges.
29% of UK home owners are planning to do up their bathroom within the next 3 years3, either to just update or to add value to their property, and with DIY getting more and more popular people are more and more inclined to get the work done themselves. However, an astonishing number of people will end up wasting money by financing their projects incorrectly.
A majority of home owners will take the time to save money
The survey4 reveals that the proportion of UK home owners who could save money when financing their new bathroom is as high as 88.9%. This is because for the 1.5 million home owners who will borrow money for their renovations the vast majority of them will end up paying unnecessary interest, and it needn’t be this way. A massive 55.1% of those surveyed said that they would take out an unsecured loan to pay for their bathroom (at an average rate of 5.6% APR), whilst 33.8% would put the bathroom on an existing card (at a whopping average of 17.31% APR). This will lose them £206 and £795 respectively. Only 11.1% of borrowers surveyed would take out a new 0% purchase credit card.
The gender divide
Money-savvy women are 17% more likely than men to pick the cheapest option and borrow on a new credit card, paying 0% interest on their borrowing for up to 18 months. In contrast, men are 30% more likely to choose the most expensive option by putting the purchase on an existing interest-bearing credit card.
The age gap
Pensioners have the least frugal borrowing habits — the over-65s are 33% more likely than the UK average to borrow on interest-bearing cards. On the other hand, 25–34-year-olds have the thriftiest habits — 13.6% picked the cheapest option of a 0% purchase card compared to 8.5% of the over-65s who said they would do the same.
Geographically speaking
Scottish people are least likely to pick the cheapest borrowing option with only 7% willing to charge their new bathroom to a credit card with an interest-free period. People from Wales, however, are far more frugal and are 80% more likely than the UK average to opt for the cheapest borrowing option.
Avoiding the mistake
Anyone planning a home improvement project or otherwise looking to borrow money should check
what the cheapest way to borrow is. The TotallyMoney.com calculator (www.totallymoney.com/cheapest-way-to-borrow-money/) could save borrowers hundreds of pounds in unnecessary interest charges.
Anyone planning a home improvement project or otherwise looking to borrow money should check
what the cheapest way to borrow is. The TotallyMoney.com calculator (www.totallymoney.com/cheapest-way-to-borrow-money/) could save borrowers hundreds of pounds in unnecessary interest charges.
In numbers
55.1% of people would finance with an unsecured loan at 5.6% APR, potentially wasting up to £206.88 each. Overall this would total a massive £17,727,861.65 in unnecessary charges in the UK this year.
33.8% of people who would borrow money, would put it on an existing credit card at an average of 17.31% APR potentially wasting up to £795 each. This means a waste of £41,789,779.2.
In 2014, UK home owners will be cumulatively wasting £59,517,640.85 in unnecessary interest - and that’s just for bathrooms.
Will Becker, Co-founder of TotallyMoney.com comments:
“When people are planning on a home improvement project, thinking about the cheapest way to borrow money isn’t necessarily high up on the list of things they get excited about. However a little bit of forward planning could end up saving them a lot of money. People who undertake a DIY project in order to save money could end up losing hundreds of pounds in unnecessary charges and fees which is a shame. Checking what the cheapest way to borrow is only takes a minute and could make a huge difference. ”
ENDS
Contact Information
Henry Keegan, TotallyMoney.com T: + 44 (0) 020 7841 3437 Margo Milutinovic, TotallyMoney.com |
Note to Editors
1 Based on a simulation of ‘The cheapest way to borrow’ tool; for an amount of £4500 repaid over 2 years.
2 Average cost of a bathroom: £4500 http://www.tradeadvisor.com/a/cost-guides/new-bathroom-cost-guide
2 Average cost of a bathroom: £4500 http://www.tradeadvisor.com/a/cost-guides/new-bathroom-cost-guide
3 http://www.gocompare.com/press-office/2013/07/254164/(assump. 9.6% this year)
4-5 Online survey conducted by Totallymoney.com among 1500 randomly selected UK adults via Google Customer Insight, May 2014.
15 million home owners http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/a-century-of-home-ownership-and-renting-in-england-and-wales/short-story-on-housing.html
29% of home owners will be installing a new bathroom in the next 3 years3.
10.8% would borrow money to do/redo a bathroom
(15,000,000*0.096=1,440,000; 1,440,000*0.108=155,520; 155,520*0.551= 85,691.52; 85,691.52*206.88=17,727,861.65)
(15,000,000*0.096=1,440,000; 1,440,000*0.108=155,520; 155,520*0.338= 52,565.76; 52,565.76*795= 41,789,779.2
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