Britain's personal debt is increasing by £1 million every four minutes sparking fears that consumers risk a New Year ‘debt hangover’ according to the latest figures by Credit Action, the national money education charity.
Statistics show that total UK personal debt at the end of September 2007 stood at £1,380 billion and the growth rate increased to 10 per cent for the previous 12 months - an increase of £120 billion.
Total secured lending on homes at the end of September 2007 stood at £1,163 billion – an increase of 10.9 per cent over the past year alone while total consumer credit lending to individuals in September 2007 was £217bn – a 5.8 per cent hike in the last 12 months.
The news follows reports this week that the average interest rates for store cards have reached an all time high at 25 per cent. The Competition Commission, a independent finance industry watchdog, has said that customers need a “wealth warning” on their monthly bills, especially considering that 23 per cent of people claim to use store cards to pay for their Christmas shopping, half of these again only do because they were offered them at the point of purchase.
Lisa Taylor from Moneyfacts explains: "Rates have been rising gradually for some months, with competition putting increased pressures on margins and bad debts on the increase. But the credit crunch seems to be the final nail in the coffin, as lenders continue to raise rates but more surprisingly withdraw their products all together. Anyone looking for a loan would be advised to act sooner rather than later as there seems to be no let up in interest rate rises.”
British shoppers are expected to spend a record-breaking £14bn on their Christmas shopping online this festive season, with more than 27 million people expected to buy over the internet over Christmas – the largest figure in Europe.
Further research from MoneyExpert.com shows that as a result of excessive spending over the holiday season, one million bills went unpaid last year however; this figure is set to soar for 2007.
Whilst the celebrations only last for a few weeks, Virgin Credit Card has found that Brits take an average of three months to pay off the bill they rack up each year, 20 per cent are still paying off Christmas up to six months later and an alarming one in ten are still paying off debts accrued over the festive season by the next Christmas.
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