UK household debt rises further in 2013

Household debt in the UK increased slightly in January, according to Credit Action.

Average household debt (including mortgages) stood at £53…

Household debt in the UK increased slightly in January, according to Credit Action.

Average household debt (including mortgages) stood at £53,972 in January – up from a revised £53,948 in December – showing that people are clearly still struggling in 2013.

Borrowing also rose further, with the average consumer borrowing – including overdrafts, credit cards, motor and retail finance deals and unsecured loans – £3,213 in January. December's revised figure stood at £3,195, which was seen as understandable due to people borrowing money to pay for Christmas, however worryingly the amount people are borrowing has not decreased in 2013.

The banks and building societies were lending more money in January, as people turned to them to gain extra funds to get by. Net lending from banks and building societies grew by £600 million, while secured lending increased by £100 million.

They were slow writing-off debt too, with £4.5 billion worth of loans being scrapped over the four quarters to Q4 2012. In the final quarter of the year £999 million was written-off by them, £469 million was credit card debt alone.

It appears consumers are still leaning on credit cards to get them through difficult times, which they hope they will be able to pay off at a later date. This can prove difficult however, especially for those with a low credit rating as interest rates can soon mean debt starts to spiral out of control, leaving many looking to use debt consolidation services.

Outstanding personal debt in the UK was at £1.422 trillion at the end of January 2013, which represents a slight rise over last year's figure of £1.408 trillion at the end of January 2012.

Astonishingly, by the end of January 2013, people owed almost as much as the country produced during the whole of 2012.

Moving forward it is expected that many people in the UK will turn to debt solution as they continue to struggle with the costs surrounding running a household and raising a family.

By James Francis

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