Unsecured debt falls for third year in a row


British families are struggling under £8,000-worth of debt – even after three years’ of paying off loans and plastic cards.

Research published today shows that the average household reduced its average unsecured debt, excluding mortgages, by £355 last year, the third year in a row that the figure has fallen.

But bean counters at PricewaterhouseCooper warned that Brits are still struggling with some of the highest levels of debt in the world.

Simon Westcott, PwC’s Financial Services practice director said: “Three years of austerity by UK consumers has only made a small dent in the total levels of borrowing.

“In addition to this, there is a growing reluctance to borrow in the future and a marked deterioration in confidence about meeting repayments, particularly among 18 to 24 year olds consumers where less than half of those surveyed believing they will be able to repay their debts.”

Difficulty repaying credit cards are by far the largest type of debt problem experienced by debt charity the Consumer Credit Counselling Service.

Last year 43 per cent of problem debt reported to the charity was credit card debt and people who turned to the CCCS for help had run up an average £11,323 on plastic.

Problems start when people start using plastic cards for essentials, rather than for convenience, warned Una Farrell of the Consumer Credit Counselling Service.

“The best way to use a credit card is to pay off the balance every month,” she said. “People quickly end up with a debt problem if they only pay the minimum amount each month.

“It means that interest is building up and debt will take much longer to pay off, as well as costing more.”

Some 26.2m plastic cards purchases are made every day, totalling a whopping £1.252bn.

But the February debt statistics published by money education charity Credit Action revealed that plastic cards are only part of the growing debt problem.

The charity’s figures show that the average household now owes £55,823 if you include mortgages.

It means the interest paid daily by people in the UK now tops £171m.

Chillingly, Mr Westcott warned that last-resort lending, such as payday loans, is becoming more mainstream as people struggle to cope financially.

“We are seeing increasing evidence of consumers seeking alternatives such as so called pay-day loans,” he said.

Payday loan firms have been heavily criticised for encourage vulnerable people into debt they can’t afford. But Mr Westcott said his research showed that better-off people are turning to the short-term lenders.

“The convenience and innovation offered by alternative lenders are encouraging a broader and more prosperous selection of consumers to choose their services over banks,” he said.

The next step is for payday lenders to start offering more traditional financial services, said Mr Westcott. “As these providers become more conventional, we are likely to see them venture further into the mainstream market with their own credit-card, longer term loan products or even current accounts.”

The good news if that happens is that they will be forced to toe the line and adopt better lending practices, such as restricting roll-over loans, which lead people quickly into unmanageable debt.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Marketing Manager - Leicestershire - £35,000

£30000 - £35000 per annum: Ashdown Group: Marketing Manager (CIM, B2B, MS Offi...

Marketing Executive (B2B and B2C) - Rugby, Warwickshire

£22000 - £25000 per annum: Ashdown Group: A highly successful organisation wit...

SEN Coordinator + Teacher (SENCO)

£1 per day: Randstad Education Leeds: Job Purpose To work closely with the he...

Research Manager - Quantitative/Qualitative

£32000 - £42000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam