Brits battling the £139bn red hole
The comparison site found people are increasingly turning to credit, be it a credit card, personal loan, overdraft, store card or a finance agreement. A third of people (32%) admit to having one type of unsecured debt, while nearly a fifth (19%) state they currently have two, and a further 9% have three types of unsecured debt.
Credit cards are the most popular borrowing vehicle, with 46% of people owing money on one. This is followed by overdrafts (24%) and personal loans (11%).
The mean average amount people owe on unsecured credit is £4,412 each. Those between 18 and 24 appear to be relying on credit more than any other age group, owing £5,446 on average – the biggest debt of all age groups. While half of those in debt (50%) owe the same or less than they did last year, a worrying 43% now owe more – 22% of people did not owe any money last year but now have debts of £1,182 on average.
Kevin Mountford, head of banking at MoneySuperMarket said: “Last week figures revealed the British economy expanded by 1.9% in 2013 – the fastest GDP growth since the first quarter of 2008. While this is positive news, and highlights that consumer spending is on the up, it is worth drawing a parallel to the fact that we should stop and think about how much of this spending is in the form of borrowing on unsecured credit.
“As our report shows, two thirds of consumers have some form of unsecured debt and, as such, it makes me question how much of a real recovery we are actually seeing if people are spending on credit rather than using money they actually have.”
People aren’t, however, feeling too overwhelmed by their borrowing, with nearly two thirds (60%) expecting to clear their debts within a year, and a further 12% expecting it to take one to two years.