What if I can’t pay my debts because of coronavirus?
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
Household debt reaches £1.5 trillion.
The Money Charity have released new research that sheds light on the growing rate of personal debt and exactly how much we all owe on average.
Overall, household debt rose from £1.44 trillion to £1.5 trillion over the year to September – but this figure does include mortgages. The Office for Budget Responsibility projects that this figure will continue to grow and that household debt could reach £2.55 trillion by 2021.
On average, Britons went further into debt by £1,046, and the average adult owes £30,000. Experts have pointed out that this is the fastest level of debt growth since before the 2008 economic crash.
While it’s true that most of the debt is made up of mortgages, it’s worrying to see that borrowing on credit cards and loans has also risen significantly. There’s been a £247 rise on average in what each of us owes on these methods of borrowing, which brings the average amount to £3,737 per person. Interestingly, most of this in on credit cards, with the average person owing £2,400 on plastic.
Some experts have voiced concerns that people are being lured into a false sense of security when it comes to borrowing. Interest rates at the moment are quite low, so high levels of debt may seem like they’re manageable. However, it might be more difficult to manage these repayments when interest rates start to rise.
Has your personal debt reached a record?
Although, the recent rise in household debt might seem alarming, it’s important to remember that borrowing money is not always a bad thing. In some circumstances it’s a sensible thing to do, and when it comes to buying a house, very few people are in a position to do this without borrowing something.
However, it’s very important to your financial health that you keep your borrowings to a manageable level and you consider how you’d cope if a financial shock was to come your way. You should only be borrowing if it’s for something that will benefit you in the long run, and if you have a sound plan to repay the amount, plus interest.
If you know you can’t afford your upcoming repayments, make sure you stay in touch with your creditors. Don’t assume they won’t try and help you just because you owe them money, they do have a responsibility to treat you fairly and it’s in everyone’s best interests to put you in a position where you can repay the debt. They might be able to reduce your payments for a while, or even suspend them for a few months. Or they might be able to freeze interest and charges on your debts for a while, to give you a bit of breathing space.
If you know you won’t be able to deal with an unexpected expense, and you’re struggling to make all your repayments, your debt level could be edging towards being a problem. It might be time to speak to a debt expert. They can explain the different options available to deal with debt, wherever you live in the country. Knowing there’s help out there and that you don’t have live weighed down by a mountain of debt should lift a huge weight off your shoulders.
by Christine WalshBack to blog home