Millions face financial woe as debt levels soar

A quarter of families are cutting back on food costs by not ordering a regular take-away, or by buying basic ranges in the supermarket, according to the Aviva report. However, they are still buying takeaway coffee.

The average family now owes nearly £10,000, as hard-pressed Britons go deep into debt to survive the recession, a report warns.

The combination of near-stagnant wages and a rising cost of living has seen the average household debt – excluding mortgages – climb by three-fifths in the last year.

And families are increasingly resorting to more expensive types of credit to make ends meet.

The Family Finances Report from insurer Aviva reveals that the average family now owes £2,266 on credit cards, £1,895 on loans and £1,650 on overdrafts.

They are also indebted to hire purchase companies (£749), doorstep lenders (£478), friends and family (£701), store cards (£913) and other informal lenders such as payday loan firms (£702).

Not including mortgages, average debt levels have soared 58 per cent over the past 12 months to £9,314. A year ago the average family owed just £5,878.

Una Farrell, of debt charity the Consumer Credit Counselling Service, said the new figures point to future financial woes for millions as the recession bites harder.

"The findings are not surprising as many millions of households are struggling to make ends meet and are turning to credit to plug the gap," she said.

"This is leading them into a spiral of unmanageable debt, as they then struggle to repay their debt as well as pay for basic living expenses.

"The big concern is that many are turning to high cost credit which becomes incredibly expensive, very quickly."

The increasing squeeze on finances is forcing vulnerable families to turn to payday lenders, which charge exorbitant interest rates – up to 4,000 per cent APR – for short-term loans.

In many cases people discover they can't afford to repay the debt in time, leaving them facing spiralling interest charges and late-payment fees on a disastrous debt spiral.

The report does contain a glimmer of good news. In spite of the recession, families have seen their monthly incomes nudge very slightly ahead of inflation, climbing 4 per cent since May 2011, compared to the latest CPI inflation rate of 3 per cent.

Monthly family incomes have hit £2,150, from £2,062 a year ago. However that figure is boosted by more people being forced to take on extra work.

Almost one in eight families – 12 per cent – report that the primary earner has taken on a second job.



Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Life and Style
The veteran poverty campaigner Sir Bob Geldof issues a stark challenge to emerging economies at the Melbourne HIV/Aids conference
Arts and Entertainment
Benedict Cumberbatch and John Malkovich talk Penguins of Madagascar at Comic-Con
comic-con 2014Cumberbatch fans banned from asking about Sherlock at Comic-Con
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
filmGuardians Of The Galaxy should have taken itself a bit more seriously, writes Geoffrey Macnab
Sir Chris Hoy won six Olympic golds - in which four events?
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Graduate Recruitment Resourcers - Banking Technologies

£18000 - £25000 per annum + OTE £40,000: SThree: Huxley Associates are looking...

Implementation Engineer

£150 - £200 per day: Orgtel: Implementation Engineer Hampshire / London (Gre...

Trainee Recruitment Consultant - Pharmacuetical

£20000 - £25000 per annum + OTE £40,000: SThree: Real Staffing, one of the UK'...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform