January 2011

Households Lower Appetite For Unsecured Borrowing

Figures revealed by the British Bankers Association (BBA) show the demand for unsecured credit is falling with net lending decreasing by £2bn in 2010. The figures reflect a turbulent time for both the economy and its consumers, with job cuts and Government spending cutbacks increasing the pressure on households. Credit card purchases also declined over the last twelve months, although at a slower rate than loans and overdrafts.

Give Your Finances Some ‘TLC’

It’s set to be a tough year, with households across the UK facing a challenging start to 2011. VAT increasing to 20 per cent in January has driven-up living costs, with the threat of further job losses putting added pressure on people’s budgets.

In these challenging times, money problems can easily spiral out of control, so it’s important to know where you stand and give your bank balance a boost if you can. Here are Debt Advice Foundation’s tips on how to give your finances some ‘TLC’:

New Year Brings Surge In Demand For Debt Advice

It’s been an extremely busy month here at Debt Advice Foundation, and our helpline has been inundated with calls from people struggling with financial problems.

Debt advice charities such as ours often receive high levels of enquiries in January. We find that people often wait until after Christmas to ask for help, with many making a New Year’s Resolution to get their finances back on track.

UK Families Still Struggling With Financial Security

A recent report from insurer Aviva has revealed a third of families in the UK do not have any savings whilst 57% of families are worried about the increasing cost of living over the next 6 months. According to the report, the average level of unsecured debt (things like credit cards/loans/overdrafts) amongst families is £5,360.  Single parent families are most likely to be free of debt(40%), although those that do have debt in this group spend an average of 29% of their monthly income on debt repayments.

2 Million Admit Paying Mortgage Debt With Credit Cards

Figures just released by the housing charity Shelter has revealed a worrying number of home owners have covered mortgage payments with their credit cards in a desperate bid to stave off financial difficulties and hold on to their homes.  According to the report, more than 2 million people have resorted to paying their mortgage through additional borrowing, a 50% increase on the previous year.

Campaign To Reduce Personal Insolvencies In 2011

This week the Insolvency Service launched a campaign to help raise awareness about debt advice services in the UK – in a bid to reduce levels of personal insolvency.

Although the number of people facing insolvency last year was slightly lower than the record breaking levels of 2009, the initiative has highlighted the need for individuals to have free access to money advice and help for dealing with debt problems.

Bankruptcy Fears For Pensioners

The UK Insolvency Service has revealed a worrying increase in levels of bankruptcy amongst pensioners. Although Bankruptcy continues to be most prevalent amongst 35-44 year olds (ten times higher than those of pensionable age), the rate of growth amongst pensioners is alarming. 

With the first of the credit card generations approaching retirement age over the next ten years and with limited opportunities to increase their income, the UK could be facing a significant credit impairment problem.

Large Numbers Continue To Struggle Despite Increases In Debt Repayment

Bank of England figures have revealed that consumers repaid £100m of unsecured debt back in November, a month that traditionally sees an increase in net borrowing.  However, figures from the Insolvency Service show that personal debt is still a huge problem in the UK with 4 out of 10 people in still owing money from Christmas 2009. 

The Bank also revealed that £6.1bn of equity was injected in the third quarter of 2010, the tenth straight quarter of net mortgage repayment.

Pressure Eased On Credit Card Borrowers

A new voluntary code of practice is being introduced to help protect credit card users from sudden interest hikes and unfair payment processing.  The changes, which have been brought about due to pressure from the new coalition government, will come as a welcome relief for those in the red and struggling to meet their monthly contracted payments.