Debt Levels Continue To Increase
Since the start of the credit crunch last year, consumers living in the UK have bee advised to batten down the hatches, cut back on unnecessary spending and focus on reducing their levels of debt on loans and credit cards and increase their savings in order to provide for an emergency fund to see them through potentially difficult times.
However, it would appear that the population in general have not taken much notice of this good advice and are continuing to increase their borrowings on new loans and credit cards to make ends meet.
According to a recent report from Unbiased.co.uk, the level of consumer debt in the UK rose by £757 million over the course of the second three months of this year, compared with the same period for last year.
This figure only takes into account additional borrowing from both unsecured and secured loans, credit and store cards and bank overdraft facilities. The figure does not include mortgage and homeowner loan debts, which have also increased as many consolidate their existing loans with a remortgage.
Whilst the level of borrowing has risen sharply, the amount of savings we make has dropped by a staggering £4 billion over the course of the past year, to £38.5 billion during the second three months of this year, from £42.9 billion at the same time last year. To put it another way, for every pound which the average UK consumer saves, they borrow 15 pence.
David Elms of Unbiased.co.uk said “With the credit crunch firmly gripping financial markets, it is crucial that people take action now and make sure that they are taking control of their finances. Reigning in on spending and making sure that your savings are working hard for you are only the start of kick starting your finances.”
