Following on from my recent blogs about the unsecured credit boom in our country, recent findings from the Money Advice Service found that forty per cent of working age people had less than £100.00 in savings. Around 30 million people in the country use credit cards with 17 million not paying off their balance each month. A previous study by the FCA found that 2.1 million people were in arrears or had defaulted on credit card payments. Another 2 million debtors had spent ninety percent of their available credit, suggesting they were only just keeping their heads above water. 1.6 million people were making the minimum repayments on their credit cards and these people would also be thought to be in the colloquial term JAMS or Just About Managing.
The issue has become increasingly prominent since the Bank of England cut interest rates to an historic low of 0.25% after the Brexit vote. This gave rise to concern that borrowers (or debtors) are storing up disaster for when interest rates inevitably rise and the cost of servicing the debt increases.
Lenders have come under increasing scrutiny for promoting irresponsible behaviour by offering cards which charge no interest for up to 30 months.
Credit card debt rose at the fastest rate for 11 years in February with shoppers spending £526m on plastic, which equates to £20m per day. British families now owe a record £67bn on credit cards, which is around £2,500.00 per household.
In summary it is clear that there are increasing numbers of people who have almost no savings while they’re taking on significant debt.
This is no doubt worrying for the many millions of debtor households who find themselves in difficulty but if you are one of those with concerns about your mounting debts, speak to a professional debt advisor who can help you to manage your debts and provide comprehensive advice for future money management.
To speak to an insolvency professional at Farleys Solicitors, please call 0845 287 0939 or send your enquiry online.