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UK Consumers Start Clawing Their Way Out Of The Financial Debt Pit
By: Mr Hanna [See Author’s Biography]
Another year ended, and another round of UK debt statistics. CreditAction has
just announced the latest summing up of the personal debt situation in the UK.
Their figures show that the end of 2005 has seen the total level of personal
debt rise to an astounding £1,158bn, an increase of £100bn compared with the
same time last year, and this debt is increasing at a rate of £1m every 4
minutes.
These levels of debt affect everyone in the country, and have become a way of
life. The average household debt is £46,863 including mortgages or £7,786
including overdrafts, finance deals, credit cards and unsecured loans, but
excluding mortgages.
To break this down further; CreditAction report that the average UK adult owes
£4,125 excluding secured loans, or £24,833 including mortgage loans.
The Financial Services Authority (FSA) are seeing distressing signs from
struggling consumers, as the rates of insolvencies, late credit card payments
and mortgage repossession orders are all increasing. The Citizens Advice Bureau
and Consumer Credit Counselling Service have both received record numbers of
people calling their debt advisory services after finding they were struggling
to pay back what they owe, with 9,310 calls taken during the first nine working
days of 2006. One in 10 single people are reported by CreditAction as saying
their finances are out of control, and according to a leading mental health
expert, Dr Roger Henderson, 43% of the adult population in the UK are affected
by money worries with 10.76m people suffering relationship problems because of
their money worries.
The surge in those contacting the debt services for help has been put down as a
positive effect by the National Debtline, as they have attributed it to an
increase in public awareness on financial matters and a knowledge that help is
available rather than a jump in the general debt levels.
The growth in consumer financial information in newspapers, television and
websites like Moneynet (http://www.moneynet.co.uk ) and The Motley Fool (http://www.fool.co.uk
) has helped to raise the public awareness on many financial issues. Consumers
can now find guides on financial services and can even quickly compare loans,
credit cards, mortgages, insurance and other finance products on a like for like
basis to obtain the best rates for services. This is making it more difficult
for expensive finance providers to find customers, but as consumers become more
finance savvy; many providers are seeking to protect their profits through
alternative methods. Many credit card providers have started introducing charges
for consumers changing credit card companies in an effort to reduce the threat
that “rate tarts” pose to their profits. The credit card and financial services
are also cracking down on those who make late repayments, breach overdraft
limits or try to repay their debts earlier than previously agreed.
The general pattern however from the most recent data from the Bank of England
looks to be that the appetite for debt among consumers appears to be waning, and
greater attention is being paid by consumers to their own personal finances. The
fact that 2005 saw nearly one in twenty consumers racking up £100+ in financial
penalties and charges making up £553m of unnecessary financial wastage going to
the lenders, means that there is some way still to go if UK consumers are to
regain control of the spiraling debt crisis.
Disclaimer:
All information contained in this article, is for general information purposes
only and should not be construed as advice under the Financial Services Act
1986.
You are strongly advised to take appropriate professional and legal advice
before entering into any binding contracts.
Useful resources:
Moneynet comparisons (http://www.moneynet.co.uk)
The Motley Fool (http://www.fool.co.uk)
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