|Location||London, United Kingdom|
|Date Posted||March 13, 2017|
Business & Finance
UK consumer debt now stands at £240 billion, new insight from MoneySuperMarket today reveals.
Almost three quarters (73 per cent) of UK adults admit they currently have some form of unsecured borrowing, such as personal loan, bank overdraft or credit card, with a third (33 per cent) of those admitting they rely on credit to get by every month.
The average amount owed per adult is £6,372, up five per cent from £6,086 in 2016. This does not include mortgages.
Worryingly, younger spenders rack up more debt, as almost a fifth (18 per cent) of 18-34 year olds owe more than £10,000, compared to just five per cent of over 54 year olds.
Indebted Londoners owe the most, at £10,244 on average, 61 per cent higher than the national average. It’s a brighter picture for Yorkshire and the Humber though, as those in debt in the region owe just £4,748 on average.
Over a third (35 per cent) of those who have more debt than they had last year blame the rising cost of living, including transport, bills and groceries. However, three in 10 (30 per cent) admit they are guilty of spending too much on luxury items, while a tenth (8 per cent) say they cannot control their spending.
Those in debt have been so for two years on average and almost half (43 per cent) have increased their debt by up to £1,500, or they haven’t cleared any of it over the last 12 months. Alarmingly, five per cent cannot see themselves ever getting out of debt, meaning 37.6 million households will remain in the red this year.
Looking ahead, only six per cent are planning to take on more debt, while a third (32 per cent) will try to clear it. However, one in 10 (nine per cent) admit they find it difficult to live within their means, so they will use credit to get by. This increases for men, as 11 per cent struggle with budgeting, compared to seven per cent of women in the red who find this is a problem.
Taking action to get back into the black:
- 30 per cent pay off their debt in full each month
- 29 per cent pay off what they can each month and are trying to clear their debt as quickly as possible
- 27 per cent are building and sticking to a monthly budget
- 16 per cent are going without luxury purchases
- 14 per cent have set up a standing order to clear debt automatically
- 10 per cent have stopped going out for meals and other forms of entertainment
Kevin Pratt, consumer affairs expert at MoneySuperMarket, said: “Inflation rose to a 32-month high in February 2017, hitting 1.8 per cent, which means the pressure on household spending is building. Indeed, the Chancellor said in his Budget speech last week that it would spike at 2.4 per cent later this year.
“That means people in debt will find it harder to get back into the black. However, there are some simple steps people in debt can take to make sure they’ve got the best possible chance of paying it off. For example, it’s important to shop around to make sure you’re paying the lowest interest rate you can.
“It’s also worth consolidating multiple expensive debts onto a low-interest personal loan. Rates are the lowest they’ve been in years so, if you’re struggling to pay off unsecured debt, this might be an attractive option. Another tactic is to transfer an outstanding credit card balance that’s charging interest to a credit card that charges 0% on balance transfers.
“What matters most is that you take a proactive approach to debt, to see if you can reduce the interest you pay and make inroads into what you owe. With the UK facing an uncertain economic future, households should be taking whatever steps they can to get their finances into the best shape possible.”
- ENDS -