Your Money: Loan ignorance isn't bliss

Consumers' appetite for yet more goods and services remains undiminished, as figures for personal debt soar ever higher. According to the Bank of England, average debt has hit £6,900 per household. You can almost hear the credit cards groaning. Yet, it seems, we have no desire to learn anything about how to manage our money better.

Our lack of interest in saving ourselves money by comparing different finance deals on loans, cars, white goods and other electronic appliances displays ignorance, or even laziness.

New research from the independent financial adviser (IFA), The MarketPlace at Bradford & Bingley, suggests that we waste more than £725m each year by not taking out the best loan deals available to us.

More alarmingly, the IFA also finds that 13 per cent of us would go straight to our bank or building society for a loan simply because it's the easiest option.

This indictment of our own consumer torpor lets high street banks and their uncompetitive interest rates off the hook, and undermines the hard work put in by consumer bodies to shake up financial institutions on our behalf.

Only last Tuesday, the Office of Fair Trading announced it was embarking on a "fact finding" inquiry into store credit cards as part of the Treasury Select Committee's own investigation of credit cards. It promised to look at their high charges and the way they are sold to us as shoppers. As the Consumers' Association (CA) points out, the lowest credit cards have rates of close to 10 per cent, while some stores charge as much as 29 per cent.

We must take responsibility for our own financial choices, and even a basic knowledge of where to get a better deal, or how to borrow effectively, would help us avoid making costly mistakes.

There are websites devoted to letting consumers analyse different products and services, while bodies, including the Financial Services Authority and the CA, have pages of advice and tables that allow us to compare deals.

Now it's our turn to make an effort and knuckle down to some serious financial homework.

Melanie Bien is away