5 September 2017: A recent report “Stuck in debt” published recently by Citizens Advice highlights the scale of Consumer Debt in the UK. The total stands at £200 billion, growing at over 10% each year and approaching the level witnessed in the run up to the financial crisis in 2008.
The main elements of this total are credit card debt (£67 billon) and car finance (£58 billion). The balance is made up of personal loans, overdrafts, store credit plus sums owed to pawnbrokers and payday lenders. Citizens Advice estimate that, in 2016, 2.9 million households were struggling with problem debt. This is where they are in arrears on their outstanding debt obligations and unable to meet repayments for more than a year.
The report offers a number of suggestions for reducing the number of people who get stuck in debt. These include:
- Increasing the statutory minimum repayment on credit card debt for new cards;
- People’s credit limits on their cards should not be increased without them requesting it and even then only if the lender has checked that the customer can afford it; and
- Lenders should scrap charges for unauthorised overdrafts.
At BRI we regularly assist individuals in financial difficulty. In some cases, this involves introducing them to a reputable debt advice organisation that will support them in addressing their problems. This avoids the risk of them being persuaded to sign up for additional borrowing or other debt management “solutions” that are inappropriate for them. In our experience that can often be the outcome when advice is sought instead via a Google search on the internet.