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22/07/2013

Personal debt concerns haunt Britain despite improving economy

Personal finance gloom grows since the start of 2013

More than 20 million people – equivalent to half (50%) the adult population of Britain – are concerned about their current level of debt, up from 42% in February, according to the latest survey of GB personal debt by R3, the insolvency trade body. 

One fifth (21%) of GB adults say they are ‘very’ or ‘extremely’ worried about their current debts, up from just 12% in February. 

42% of GB adults say they struggle to make it to payday, of whom the vast majority (67%) blame the rising cost of living for their financial difficulties. 

R3’s president Liz Bingham says: “Although the economy is starting to pick up, many families are finding themselves left behind, weighed down by the cost of the day-to-day.” 

“Many people are struggling to afford the absolute essentials. It is hard to see the situation improving over the rest of the year, especially given the run-up to Christmas coming up in the autumn.” 

“There is a sizeable chunk of the population in a very precarious position. They are renting, they have no savings, and they are only able to pay off the interest on their debts without making any headway into the principal. These people have no financial buffer to cope with any increase in the cost of living.”

27% of GB adults – more than 12 million people – say they do not have any savings at the moment, up from 23% in February.

Additionally, the number of ‘zombie debtors’ – those who can only repay interest on debts, but not the principal – has climbed since February. 10% of GB adults say they are only paying interest on credit card bills, up from 7% in February. Similarly, 7% of GB adults are only paying the interest on their overdraft, up from 4% in February. 

Credit cards (42% of those worried about current debts), mortgage repayments (22%), and overdrafts (20%) are the most common types of debt that worry those with financial concerns.

Liz Bingham says: “Credit cards and mortgages may still be the biggest debt concerns, but their dominance has decreased over time. The credit market is becoming increasingly fragmented as traditional sources of credit become harder to access.”

 “Other types of debt, such as payday loans, have become established as a concern for those with money worries over the past few years.”

10% of those worried about current debts said that payday loans were the debt that worried them.

Notes:

  • Methodology: ComRes interviewed 2,060 GB adults online between 31st May and 2nd June 2013. Data were weighted to be demographically representative of all British adults aged 18+. ComRes also interviewed 2,007 adults online between 1st and 3rd February 2013.  Data were weighted to be demographically representative of all British adults aged 18+.ComRes is a member of the British Polling Council and abides by its rules (www.britishpollingcouncil.org).
  • Full data tables are available on the ComRes website, www.comres.co.uk
  • R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
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  • R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals. Website www.r3.org.uk

 

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.