74% of Brits give debt the cold shoulder as recession continues

30 April 2009 / by Rebecca Sargent
Almost three quarters of Brits have steered clear of more borrowing since the recession hit

As financial priorities change to reflect the turbulent economic climate, research from Fairinvestment.co.uk has found that Brits are steering clear of more borrowing.

In August last year, Fairinvestment.co.uk* found that the average debt on credit and store cards totalled more than £2,000, while the average loan, not including mortgages, was in excess of £3,800.

But, as credit criteria and purse strings tighten, new research** from Fairinvestment.co.uk has found that 74 per cent of Brits have refrained from borrowing more money.

Of the remaining 26 per cent of Brits who have borrowed more since the recession took hold, some have borrowed through more than one method. The research found that of these seven per cent have taken out an additional credit card while six per cent have chosen to borrow money from friends and family.

A further five per cent have succumbed to another personal loan, while three per cent have turned to short term loans such as pay day loans.

In addition, the recession has forced nine per cent of respondents in to debt for the first time, as five per cent said they have had to get their first personal loan, while four per cent have had to take out their first credit card.

The survey also found that if people had extra cash at the end of each month, 26 per cent would use it to pay off their existing debts.

Commenting on the statistics, chartered financial planner at Fairinvestment.co.uk, Sharon Bratley said: "The fact that the majority of people are steering clear of getting into further debt is encouraging, and a sign of the changing economic climate.

"Not long ago, people thought nothing of getting another loan or credit card, as credit was easier to secure, but as lenders tighten their criteria it seems people are taking note.

"For those who are considering taking out a loan or credit card, it is important to gather information and compare the whole market to make sure they are getting the best available deal for their circumstances.

"It is also encouraging that more than a quarter of Brits would use any extra cash to pay off existing debts, as this should be a priority for those who can afford it and are not experiencing financial difficulties," she added.

Ends

*Survey conducted by OnePoll for Fairinvestment.co.uk with 2,511 respondents in August 2008

**Survey conducted by OnePoll for Fairinvestment.co.uk with 2,000 respondents in December 2008