Half the nation concerned about their debts

Nearly half of individuals (47%) are concerned about their debts, according to the latest wave of R3’s, the insolvency trade body, Personal Debt snapshot.  The quarterly tracker of the nation’s finances reveals a 7% rise in debt concern, compared to this time last year.

Of those who are concerned about their debts, credit card debt continues to dominate fears for 53% of individuals; an increase of 5% on last quarter.  Concern about certain types of debt has increased this quarter:  Payday or other short term loans (up 2%), hire purchase (up 3%) and store cards (up 1%); while worry about secured lending has reduced such as mortgage repayments (down 4%) and bank loans (down 2%).

Frances Coulson, R3 President comments:

“Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short term credit solutions.  Individuals turning to short term loans and credit cards should be wary of the high interest rates that often accompany these products.  Overall debt can quickly snowball out of control.

“Concern about secured lending is also likely to have fallen due to the Bank of England continuing to keep interest rates at a historic low.  Households have begun to feel comfortable that their mortgage repayments will remain as they are for the foreseeable future.”

Young people have faced ‘kidflation’

Analysis by Santander has found that young people have faced ‘kidflation’ at a significantly higher rate than headline RPI.  Looking specifically at the goods and services typically purchased by 10-16 year olds, Santander found that the price of items routinely bought by children rose by 14.3% between June 2008 and June 2011, compared to an 8.5% growth in RPI inflation over the same period.  This includes increases in the cost of sweets (24.0%), soft drinks (16.2%), children’s clothing (17.4%), entertainment and other recreation costs (13.6%) and telephone costs (10.4%).


Source:  Credit Action – September 2011 edition

Banks see lack of demand for borrowing

Householders and companies are continuing a safety-first approach to debt reflecting slow growth in the UK economy, a banking body has said.

Outstanding debt on consumer overdrafts and personal loans, at £52bn, was at its lowest for 10 years, the British Bankers’ Association (BBA) said.

However, there was a slight rise in the number of mortgages approved in July.

Among businesses, the banks said that debt repayments by companies were outstripping new loans.

Read the full article at bbc.co.uk

Credit Action – Debt Stats Round up (September 2011)

  • Every 4.31 minutes someone will be declared insolvent or bankrupt
  • Every 14.6 minutes a property is repossessed
  • 1,688 people are made redundant daily
  • Citizens Advice Bureaux deal with 9,072 new debt problems each working day
  • The average household debt (including mortgages) is £55,814
  • 838,000 people in the UK have been unemployed for 12 months or more
  • £176,000,000 is the amount of personal interest paid in the UK on a daily basis

‘Staycation’ the holiday of choice for debt conscious Brits

Nearly one in four of the British public is trying (or will try) to spend less on their holiday this year.  Of those saving money, 59% are choosing to holiday at home instead of abroad, according to a recent poll by R3, the insolvency trade body.

While those who have decided to venture to foreign waters, 71% are choosing less expensive accommodation, 66% are choosing a cheaper travel option and 60% are spending less money on eating out and activities once on holiday.

Frances Coulson, R3 President comments:

“It’s unsurprising that people are choosing to stay at home instead of holidaying abroad to cut down on their expenditure, given that we have seen consumers’ disposable income become squeezed as a result of inflationary pressures.

“Consumers who are cutting back are already having a significant impact on the economy, as the latest drop in retail sales revealed.  The nation deciding to stay at home might provide the much needed boost to the UK economy, particularly in tourist areas and coastal towns where insolvency levels rocketed during the recession.”

R3’s research found nearly a third of Britains’ have chosen not to go on holiday at all, an increase from one in four (25%) people this time last year and those who are having a holiday this year, 5% will be borrowing to pay for it.  They will borrow on average £1,581 and will take on average nine months to repay.

Average UK student debts could hit £53,000

Average debts may reach £53,000 for UK students starting in 2012 – double the figure for 2011 – an annual survey suggests.

The Push University Guide said average annual debts had risen 6.4% in the past year – more than inflation – to £5,680.

Researchers interviewed 2,800 students and based the projection on an average course length of 3.4 years.

Tuition fees in England will rise in 2012, but ministers say students should not be put off for financial reasons.

Read the full article at bbc.co.uk


Fuel poverty increasing with recent price hikes

Official figures released by the Department for Energy and Climate Change suggest that, in 2009, there were around 5.5 million fuel poor households in the UK, up from 4.5 million in 2008.  A household is said to be in fuel poverty if it has to spend over 10% of its income to maintain an adequate level of warmth.

Meanwhile, a survey by uSwitch suggests that fuel poverty has spiralled further, and that 24% of UK households are now classed as fuel poor.  36% of working class households are in fuel poverty, but uSwitch believe that the problem is rapidly spreading up the income scale, with 15% of middle class households fuel poor as well.  Single working parents are most likely to be fuel poor, with 39% of this group classed as being in fuel poverty according to the uSwitch survey.


Source:  Credit Action – August 2011 edition