A massive 46% of consumers believe they do not need any financial advice, despite worrying levels of debt, research has found.

Arrow Global’s Debt Britain report has revealed that 28% said they seek advice from friends and family when it comes to money matters, while only 19% said they have taken advantage of specialist free advice from debt charities and organisations.

The findings could explain why many people who find themselves in debt can feel out of control with a detrimental impact on their credit ratings, as 27% of consumers admitted they did not know a missed debt repayment can adversely impact their credit rating for up to six years.

Lee Rochford, group chief executive officer of Arrow Global, said: “With just 19% using free debt advice and 46% of consumers thinking they don’t need to seek advice, we’re concerned this is potentially storing up debt problems for the future.

“Financial awareness is critically important for all consumers and will help ensure consumers manage their finances in a responsible and affordable way. For those who do fall into debt arrears, we work with a number of debt charities and organisations such as StepChange, Citizens Advice and National Debtline, to ensure that customers who need advice are signposted in the right direction.”

The most common source of debt is an outstanding credit card balance, which was reported by 45% of consumers. With an average balance of £5,960, a massive 31% of consumers said they do not know the interest rate they are paying.

This is particularly worrying as research suggests that it can take up to 27 years to clear a debt by only paying off the minimum balance each month on a credit card loan of £3,000 at 17.9% APR.

This lack of awareness on the interest rate being paid covers other sources of debt too. Student loans scored the highest with 47% of consumers not knowing the interest rate they are currently paying, followed by overdraft at 41% and mail order credit at 39%.

While 56% of consumers have checked their credit rating using a free service, 70% said it was out of general curiosity.

Kusal Ariyawansa, a chartered financial planner at Appleton Gerrard, said: “We tend to seek help predominantly when a task needs a specialist; there’s a lack time or we have a problem. Many people feel perfectly capable of dealing with finances because they seem quite straightforward. A salary comes in and bills go out, right?

“The key reason why things go out of control is when you are unable to manage this seemingly simple task. Unexpected events occur which includes impulsive expenditure. If you know there is a pot of savings in the background, those shocks can easily be dealt with. If no savings exist, or, there is known debt, the anxiety could affect your mental health which could risk the salary, and so on.

“There is an easier way to ensure the chances of things going wrong are minimised. Firstly by speaking to a certified financial planner you can plan ahead and gain valuable insights into how easily or cost effectively your financial and lifestyle goals can be achieved. Next it is vital that debt is avoided in everything but the essential necessities. It is debt that the destroys one’s confidence when things don’t seem to be going to plan.”

Aamina Zafar is one of the UK’s leading financial journalists. She has previously worked as a senior reporter at FT’s Financial Adviser. The award-winning journalist writes regularly on the IFA community, mortgages, pensions and financial regulation.

Further reading on this topic:

£96bn of debt is hidden by adults says Money Advice Service