UK household borrowing increases in 2012

Household borrowing in the UK increased in 2012 on three separate occasions.

This is according to Credit Action and it bucks a trend that had seen …

Household borrowing in the UK increased in 2012 on three separate occasions.

This is according to Credit Action and it bucks a trend that had seen the figure fall in the preceding three years. It demonstrates how a number of factors, such as increased living costs and below-inflation pay rises, are hitting consumers' pockets.

Unsecured borrowing had been falling month-on-month since January 2010, but it increased in March, September and December 2012. Moving forward, more people may find themselves seeking a debt solution as they struggle to deal with the expense associated with running a house.

Average household debt stood at £5,946 in December – up from £5,914 in November – and part of the reason for this hike could be because some individuals overstretched themselves in the run-up to Christmas.

Credit Action chief executive officer Michelle Highman stated: "If you can't avoid borrowing, shop around to get credit on the best terms you can – find out upfront about any fees, interest rates and minimum repayments. 

"If you're still paying off money you borrowed in 2012, plan how you're going to manage your debt this year. That might include talking to a debt adviser or shifting a credit card balance to one with a lower interest rate."

UK consumers' outstanding personal debt stood at £1.4 trillion at the end of December 2012, while £165 million was paid on these arrears every day of the month. This highlights how important it is for people to remain debt free, as it prevents them having to pay excessive amounts of interest on their borrowings.

The Credit Action report also showed that 277 people are declared insolvent or bankrupt every day, which equates to one person every 5 minutes and 12 seconds. There were also 1,556 Consumer County Court Judgements issued daily in 2012, while 90 properties were repossessed.

By Joe White

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