An increasing number of consumers are developing debt difficulties, according to new research.
In a study from Thomas Charles, 8.2 million Britons are reported to have "serious" problems managing their finances. Out of these consumers, just under a quarter (2.1 million) are said to be struggling to make repayments on various aspects of borrowing such as credit cards, overdrafts and personal loans. The survey, which was conducted by YouGov, revealed that during the second quarter of 2007 some 18 per cent of adults owed at least 10,000 via unsecured debt - an increase of 29 per cent from the previous three-month period and a further 30 per cent up from the same time in 2006.
Scotland was said to contain Britain's largest proportion of indebted residents, as about one out of five (19 per cent) owe at least 10,000. Conversely, the north has the lowest number of those struggling heavily with their finances, as such people accounted for only 16 per cent in the region. However, residents in London were reported to be particularly driving the country's difficulties in handling their finances, with 40 per cent of those living in the capital with unsecured debts of 10,000 or above experiencing regular problems in making repayments. Among people living in the rest of the south of England, this level was said to have halved to 20 per cent. Meanwhile, 18 per cent of consumers from Wales and the Midlands currently experience such struggles with their money.
Figures from the financial services firm also estimated that some five per cent of consumers will owe more than 30,000 in unsecured loans over the course of August. However, during the same month last year, just one per cent owed such a sum. Although on average men owe more money than women - as 18 per cent of males have unsecured debts of at least 10,000 in comparison to 15 per cent of females - it was women who were said to have the most trouble in handling their money. An estimated 27 per cent of females experience regular problems making credit repayments, with this falling to 24 per cent among the opposite sex.
James Falla, director for Thomas Charles, said: "Over the past year, we have seen a sharp increase in the number of people who have taken on unsecured debt and are now struggling with repayments. These high levels of unsecured debt are clearly linked to the rise in interest rates over the last 12 months. A record rise in house prices, especially in London and the south-east, has led to a growing discrepancy between mortgage payments and salaries.
"The high pressure to maintain social and commercial status, particularly experienced by women, often goes hand in hand with high expenditure on the high street. Borrowers affected by the higher interest rates now are storing up debt problems for the future - instead of making cuts in their personal expenditure, they are taking on further unsecured loans and credit cards." Mr Falla added that when used sensibly and paid back on time, credit can be a useful tool for Britons although a rising number of borrowers are "walking the tightrope". However, he claimed that although the country is currently not in crisis in terms of handling debt "it easily could be if the economy turned".
As a result, Mr Falla urged those struggling with their money to not "bury your head in the sand". By talking with credit providers, he claimed that borrowers will be able to draw up a debt management plan to help them manage their monthly outgoings. Meanwhile, homeowners were also advised to check how much their secured loan repayments could rise should the Bank of England's monetary policy committee choose to increase the base rate in the future.
Earlier this year, MoneyExpert chief executive Sean Gardner advised that those borrowers who do not make payments on secured loans could risk damaging their credit history and going to court. His comments come after findings from the firm indicated that more than 1.38 million loan repayments have been missed since the beginning of this year.
In a study from Thomas Charles, 8.2 million Britons are reported to have "serious" problems managing their finances. Out of these consumers, just under a quarter (2.1 million) are said to be struggling to make repayments on various aspects of borrowing such as credit cards, overdrafts and personal loans. The survey, which was conducted by YouGov, revealed that during the second quarter of 2007 some 18 per cent of adults owed at least 10,000 via unsecured debt - an increase of 29 per cent from the previous three-month period and a further 30 per cent up from the same time in 2006.
Scotland was said to contain Britain's largest proportion of indebted residents, as about one out of five (19 per cent) owe at least 10,000. Conversely, the north has the lowest number of those struggling heavily with their finances, as such people accounted for only 16 per cent in the region. However, residents in London were reported to be particularly driving the country's difficulties in handling their finances, with 40 per cent of those living in the capital with unsecured debts of 10,000 or above experiencing regular problems in making repayments. Among people living in the rest of the south of England, this level was said to have halved to 20 per cent. Meanwhile, 18 per cent of consumers from Wales and the Midlands currently experience such struggles with their money.
Figures from the financial services firm also estimated that some five per cent of consumers will owe more than 30,000 in unsecured loans over the course of August. However, during the same month last year, just one per cent owed such a sum. Although on average men owe more money than women - as 18 per cent of males have unsecured debts of at least 10,000 in comparison to 15 per cent of females - it was women who were said to have the most trouble in handling their money. An estimated 27 per cent of females experience regular problems making credit repayments, with this falling to 24 per cent among the opposite sex.
James Falla, director for Thomas Charles, said: "Over the past year, we have seen a sharp increase in the number of people who have taken on unsecured debt and are now struggling with repayments. These high levels of unsecured debt are clearly linked to the rise in interest rates over the last 12 months. A record rise in house prices, especially in London and the south-east, has led to a growing discrepancy between mortgage payments and salaries.
"The high pressure to maintain social and commercial status, particularly experienced by women, often goes hand in hand with high expenditure on the high street. Borrowers affected by the higher interest rates now are storing up debt problems for the future - instead of making cuts in their personal expenditure, they are taking on further unsecured loans and credit cards." Mr Falla added that when used sensibly and paid back on time, credit can be a useful tool for Britons although a rising number of borrowers are "walking the tightrope". However, he claimed that although the country is currently not in crisis in terms of handling debt "it easily could be if the economy turned".
As a result, Mr Falla urged those struggling with their money to not "bury your head in the sand". By talking with credit providers, he claimed that borrowers will be able to draw up a debt management plan to help them manage their monthly outgoings. Meanwhile, homeowners were also advised to check how much their secured loan repayments could rise should the Bank of England's monetary policy committee choose to increase the base rate in the future.
Earlier this year, MoneyExpert chief executive Sean Gardner advised that those borrowers who do not make payments on secured loans could risk damaging their credit history and going to court. His comments come after findings from the firm indicated that more than 1.38 million loan repayments have been missed since the beginning of this year.
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