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The Shape of Consumer Debt in Britain - [BACK] The level of debt in Britain has grown massively since the turn of the millennium, with the figure reaching some £1.3 trillion by June 2007. Outstanding debts on credit cards have slowed somewhat since 2004, but there are still some sixty five million credit cards in issue in the UK – that’s more cards than there are people. It also seems that while many of us are concerned about debt, few do much to try and stem it. This Christmas 2.5 million people will still be paying off debt that they accrued in the last festive period, while research carried out by Alliance and Leicester found that forty two percent are worried about their spending in the run up to Christmas. Despite this, very few people are willing to cut back significantly at Christmas time. With a large number of people facing rejections from credit from banks this year due to the credit crunch it seems likely that there will be a rise on store card spending. Sixteen million Britons owe a total of almost £2.2 billion on store cards, with average interest rates hitting 26% - almost twice that of the average credit card. People are typically lured into store cards by access to immediate credit and the small discount that they will get on goods, but these discounts will be negated by the high level of interest if the purchases are not swiftly paid off. With more difficult access to consumer credit the Christmas binge on store cards almost seems understandable. However, Alliance and Leicester’s research throws up some quite contradictions in the manner that many Britons will continue to spend. For instance, twenty six percent of people asked in a survey claimed they could not cut down on their spending at all, while thirty two percent of the group said they can't save because they couldn't afford it. Somewhat ironically, a third in this latter group admitted that they would not be prepared to cut down on any luxuries. It seems that there is currently a considerable amount of confusion about debt in the UK. Ross Dalzell, Manager for Savings at Alliance & Leicester, explains: "Times have changed and while concerns about expenditure are high, attitudes towards what we can or can't go without in our daily lives are very different to ten years ago. Busy working lives may be responsible for creating a need for convenience, but also for reward, as we feel we deserve the little things that make our lives 'easier' and can't go without them, even if we know we could do with the extra cash sometimes." If you have debts then it might be the time to consolidate them into one monthly payment through taking out a personal or secured loan. Natwest are currently offering loans of £15,000 or more for a typical APR of 7.4%, they are also offering credit cards that will charge no interest on balance transfers that you make to it for the first thirteen months. [BACK] |