Credit providers become more prudent

Posted 2008-01-3

Research shows that UK families are failing to control their spending.  A report by uSwitch, accredited by the Financial Services Authority, found that a quarter of 16 to 44 year olds are worried about bills in the New Year and that more over 50% of people do not know how much they spent over Christmas.

uSwitch discovered that nearly a quarter of adults are struggling to manage their debts, with 9.5 million people have reached their limit on one form of credit in the past 6 months.  Interest repayments in Britain have increased by £12.7 billion to an all time high of £93 billion.

Nearly a quarter of adults say they are struggling to manage their debts – many being put under pressure by rising interest rates and subsequently mortgage rates. The average estimated annual interest bill is £3,744 per household, including mortgages.  This is an increase of £517 compared with 12 months ago.

Despite increasing debts and interest rates, uSwitch found that 26% of people are more likely to take up new hobby or book holiday in 2008, whereas only 13% would make an effort to get their finances in order. Mike Naylor of uSwitch said that people with debts need to take steps to better manage their finances:

“People have enjoyed easy access to cheap credit for a long time. The recent reduction in interest rates is a step in the right direction, however, it could be too late for those in severe difficulties.”

Credit consumers are being warned that the credit boom is coming to an end and lenders are becoming more prudent; market research shows that 38% of those who applied for a credit card in the past 6 months have been rejected.

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