Debt Levels Rising as Consumers Face a Challenging January
A report issued last week has highlighted the fact that consumers will face a tough 2011 as debt levels continue to rise across the country.
It is estimated that households will need to find at least an extra £1,800 a year to simply pay the interest on their unsecured debt.
Experts believe that interest rates on loans and credit & store cards will increase by between 2% and 3% during the next three years meaning that on average consumers will require a substantial amount of extra money to meet debt repayments.
It is believed that new government regulation such as the requirement for banks to hold more capital to back up their money will drive the costs up which will be passed onto the consumer.
A recent trend of spending less and paying back debts has emerged in the UK which has meant tough times for credit providers with the average household reducing its unsecured borrowing by £500 in 2010 with this trend set to continue in 2011.
In addition to this, statistics show a recent decline in the number of people acquiring credit cards – a trend which has continued throughout 2010. Many consumers are now more conscious of their debt level and seeking alternative credit options to credit cards and unsecured loans.
Despite an overall decline in accepted credit card applications the UK household debt still stands at around £8,000.
The current trend of stricter borrowing terms is set to continue with credit card companies and banks focusing on borrowers with a strong credit history and many other individuals facing a tough time getting loans and credit.
A debt management plan
can help with large unsecured debts.