One in 10 spend half income on debt
Updated on 16 February 2009
Nearly one in 10 Britons now spends more than half of their income on unsecured debt repayments, new research has shown.
The proportion of people who see half of their pay taken up by loan, credit card and store card repayments has soared four-fold during the past 16 months, to 8% of people in December, compared with 2% in August 2007.
Young people are most likely to find themselves in this situation, with 12% of 25 to 34 year olds spending at least 50% of their pay on unsecured debt repayments, up from 6% in August last year, according to credit reference agency Callcredit.
To put the figures into context, the Department for Business, Enterprise and Regulatory Reform classes people who have to spend more than 25% of their income on unsecured debt repayments as being over-indebted.
Callcredit warned that having to devote twice this level of income to debt repayments was likely to be unsustainable.
Nearly seven out of 10 people are more concerned about their financial situation now than they were 12 months ago, with this particularly the case among the over 55s.
A further 45% of the nearly 2,000 people questioned also expect their financial situation to get worse during the coming year, with only 19% thinking it will improve.
Owen Roberts, of Callcredit, said: "The worsening economic climate is having a clear effect on consumer attitudes and behaviour.
"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."
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