Spending on unsecured debt soars
08 October 2008
Number of individuals spending over 50pc of their monthly income
on unsecured debt repayments triples in one year
Key statistics
- The proportion of UK adults spending over 30pc of their income on unsecured debt payments has doubled in past year (from 7pc to 14pc)
- The percentage of people spending over 50pc of their income on unsecured debt payments has tripled in past year (from 2pc to 6pc)
- Almost one in ten women (9pc) is spending over 50pc of their monthly income on unsecured debt repayments, compared to 4pc of men. Last year, 2pc of women and 2pc of men spent this amount
- Over two thirds of people (69pc) think that their financial situation has got worse over the past 12 months, with 35 to 54 year olds feeling the pinch most (73pc feel it has deteriorated)
- 43pc of people think their situation will not improve over the next 12 months, compared to 24pc who think it will improve
- Older people are the most pessimistic about their financial future with 54pc of those over 55 years believing that things will get worse, compared with 25pc of 18 to 24s
- Almost half (49pc) of young people (18 –to 24yrs) believe that their financial situation will improve over the next 12 months
The proportion of people spending over 30pc of their monthly income on unsecured debt re-payments has doubled over the past year to 14pc according to independent research commissioned by credit reference agency Callcredit. The same research also showed that the percentage of people using over half of their monthly income to service unsecured debts has tripled from just 2pc in September 2007 to 6pc today. Guidelines from the former DTI (now the Department for Business, Enterprise and Regulatory Reform, BERR) identify the threshold for becoming over indebted as an individual spending over 25% of their gross monthly income on unsecured repayments.
Almost one in ten women (9pc) is spending over 50pc of their monthly income on unsecured debt repayments, compared to 4pc of men. Men and women aged 35 to 44 years appear to be struggling the most with 10pc having to put half of their income towards debt repayments.
Consumers do not appear optimistic about their financial future with 43pc of individuals believing that their current situation is going to worsen over the next 12 months, compared to 24pc who think it will improve. The older age groups appear far more pessimistic than younger generations with 54pc of all those aged over 55 years believing that their situation will not improve over the coming year.
Owen Roberts, head of Callcredit Check, the consumer arm of Callcredit comments “The increasing proportional spend on unsecured debt paints a concerning picture of consumer finances within the UK and this level of debt servicing would appear to be unsustainable. With many people unable to see any light at the end of their financial tunnel, there is a perception that worse is still to come. Our advice to any individual who is struggling with debt repayments is to speak with their lenders before things become unmanageable or contact an independent organisation such as the Consumer Credit Counselling Service to work out the best way forward.”
Research information
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2000 adults. Fieldwork was undertaken from the 5th to the 7th of August 2008. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
About Callcredit:
- Callcredit (www.callcredit.co.uk) is the UK's most innovative, state-of-the art credit reference agency, with an extensive range of information and value added services for businesses and individuals.
- Callcredit check (www.callcreditcheck.com) is the consumer arm of credit reference agency Callcredit, providing consumers with instant online access to their credit report and services to help them monitor their credit status.
- Callcredit has harnessed state-of-the-art information technology with an unrivalled knowledge of the industry's needs to develop a range of innovative information solutions. Solutions that are enabling major lenders and a host of other blue chip companies to address regulatory requirements, make better credit decisions, target new customers more effectively and manage existing customers more profitably.
- Callcredit is one of six core businesses that form the Callcredit Information Group. The other five are:
- Database management company EuroDirect
- Market analysis firm GMAP Consulting
- Online payment service provider, Legatio
- Scorecard development and affordability assessment specialist DecisionMetrics
- Marketing services and database specialist, Broadsystem
- Following the publication of Sir James Crosby's report, Callcredit has joined forces with the other two UK credit reference agencies to offer expert advice for victims of ID fraud. This joined up approach will mean that victims can contact Callcredit who will then alert the other two agencies to the fraud on their behalf. Our ID fraud team will also work with victims to contact all lenders and ensure that fraudulent information is removed and the consumers' credit history is fully restored.
For further press information contact: Jane Fordham, Katie Moore or Sophie Smith at the Callcredit Press Office on
0207 067 0600 or callcreditpr@golinharris.com
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