Debts still on the increase, study shows

02/07/2009

New debt figures have suggested that the credit crunch is leading people to borrow less than before.

According to charity Credit Action, the collective national personal debt stood at £1.46 trillion at the end of May.

Over the month, £1 million was added to this total an average of every 77 minutes.

However, in January 2008 - before the worst effects of the credit crunch and recession had been felt - £1 million was being added every five minutes.

Over the intervening months, credit conditions among high street lenders have become much tighter.

Fears over rising unemployment have also encouraged consumers to steer clear of borrowing too much.

Kevin Still, EuroDebt director, commented: "EuroDebt's experience is that the levels of unsecured debt have risen quite significantly in the last 18 months. We are now seeing the average level of unsecured debt at over £29,000 with eight creditors and this figure is over £35,000 with nine creditors if we only look at homeowners.

"Short-term borrowing still appears to be the preferred route for many consumers to deal with cashflow problems before it is apparent that they are in serious financial difficulty. The current levels of mortgage arrears and rent arrears are testimony to the fact that many people allow their finances to get out of control before seeking professional help."

In all, Credit Action found that an average £21,640 of debt was held in May for each household which had some form of unsecured credit outstanding.

The typical amount owed by every UK adult stood at £30,000 - including money owed on credit cards, personal loans and mortgages.

Recently, data from the Bank of England show that UK residents owe £233 billion in unsecured credit, including loans, credit cards and overdrafts.

Tags; Debt Management and Banking, Credit Card Lifestyle,

• Share
• 
• 
• Store
• 
• Follow
•