Debt mountain rises as each person owes £6000 in unsecured finance

April 5, 2010 | by | 0 Comments

The average British adult owes close to £6,000 in non mortgage-related debt, a new report has revealed.

A study of 3,000 people found the majority are still struggling under the strain of big balances on either credit cards, loans, overdrafts or finance agreements.

This is despite a large percentage making inroads into their debts over the last 18 months after the recession provided a financial wake-up call.

The report found the typical Brit has a credit card debt of £1,747 due to overspending on clothes, shoes, gadgets and furnishings.

They also owe another £3,077 on loans taken out to cover cars, weddings, holidays and house repairs.

A further £518 of debt is owed on bank overdrafts, with most people also owing around £646 on finance deals to cover kitchens, sofas or other household goods.

That adds up to an average personal deficit of £5,988.

A spokesman for lovemoney.com, which carried out the research said: ”It’s a shame that the average Brit has so much debt, but I’m not surprised.

”It was way too easy to borrow during the economic boom and it’ll be a long time before we’ve all nursed our finances back to good health.

”If you’ve got big debts, it’s crucial that you should start budgeting. Find out exactly how much money you’re spending every day and then you may be able to spot areas where you can save.

”There are lots of tools that can help you budget better including lovemoney.com’s own online banking service.

”It’s also worth trying to increase your income if you can. Could you possibly get a second job at the weekend? Or maybe rent out a spare room in your home.”

The poll shows just over half of those questioned are fully aware of the debt they are in – with 47 per cent admitting it is because they spent more than they earned.

A third claimed they have never been very good at managing their money, while 12 per cent blamed their situation on losing their job.

A quarter said they were forced to take out overdrafts and credit cards to cover everyday necessities such as petrol and food.

Fourteen per cent have taken out loans to buy a new car, while 13 per cent used one for home improvements.

Unfortunately, 50 per cent of people can only afford to pay off the minimum amount on what they owe each month – and estimate they will be in debt for another four years at least.

And for 12 per cent, the amount they owe is going up, rather than down.

The spokesman from www.lovemoney.com added: ”If you can only afford to make the minimum repayments, you may be in a real debt crisis.

”The best way out of a debt crisis is to get free counselling from one of the debt charities such as National Debtline.

”These charities can then help you negotiate new payment terms with the banks and you may not have to pay any interest as well. That could help you really get on top of your debt.

”The worst thing to do is put your head in the sand. Tell your lender that you’re struggling and you may get a more sympathetic response than you expect.”

The study also revealed the top ten UK cities which are in the most debt – with the university city of Exeter taking top spot.

The average Exeter resident owes a staggering £7,207.31 – that’s £1,217.47 more than the national average.

People living in the Devon holiday hot spot owe approximately £1,219.51 on credit cards and a further £3,414.63 in loans.

They also have overdrafts totalling £1,335.37 and finance deals worth £1,237.80.

The second worst debt city is Edinburgh, where people owe an average of £6,922.22.
Third place went to Cardiff where unfortunate adults have debts totalling £6,771.74.

Leeds, Swansea, Oxford and London also appear in the top ten list.

TOP 10 DEBT HOTSPOTS

1. Exeter – £7,207.31
2. Edinburgh- £6,922.22
3. Cardiff – £6,771.74
4. Cambridge- £6,755.17
5. Leeds – £6,694.45
6. Swansea – £6,694.45
7. Oxford – £6,634.06
8. London – £6,567.38
9. Manchester- £6,413.35
10. Brighton – £6,031.25

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