28% of credit users view debt as necessary part of life

Some 28 per cent of credit users view debt as an accepted part of their lives.

This is one of the main findings from new research by Which? and it highlights how more than one-quarter of consumers are developing worrying attitudes when it comes to money management.

Struggling to make ends meet

Nearly six in ten (57 per cent) credit card users regularly pay for rent, bills and essentials such as food with their plastic. This demonstrates how these individuals do not have enough cash month-to-month and so are being forced to rely on unsecured lending.

While 21 per cent admitted they have no savings buffer in place, 24 per cent would be forced to cut back on essentials in order to fund a financial emergency and the same number use payday loans in order to clear other debts.

Which? executive director Richard Lloyd said: "For an increasing number of people, using credit to pay for essentials has become the norm. This has led to people being forced into a vicious cycle, taking out further, expensive credit to pay off existing debts."

Irresponsible lending needs to be addressed

Because of the seriousness of the situation, Which? is calling on the government to crack down on irresponsible lending in an effort to prevent people from finding themselves in a debt spiral.

Indeed, Mr Lloyd thinks the industry as a whole needs to "clean up their act" so that consumers no longer fall prey to unscrupulous practices as they struggle to make ends meet in the current economic environment.

With the new regulator – the Financial Conduct Authority (FCA) – set to take over responsibility for the market from April 1st 2013, Which? has outlined five changes it would like to see introduced:

Ban excessive default fees and charges – The FCA should make sure default charges reflect lenders’ actual costs, while a cap on the total amount of charges should be introduced
Crack down on irresponsible lending – Strong rules should be introduced on affordability checks so people are only loaned money if they can afford to repay it
Give people more control – Unsolicited increases in credit limits should be outlawed, while unauthorised overdrafts be opt-in
Transparent information – The cost of credit and all fees and charges needs to be transparent
Swift and early intervention – FCA has to do more to help borrowers in difficulty

Seek out a debt solution

Consumers who are struggling with their finances need to seek out help at the earliest possible opportunity, as ignoring the issue will only make it worse. Depending on the level of debt, there are a number of options open to people, such as debt management plans and individual voluntary arrangements (IVAs).

In order to qualify for the former, Britons need to have debts above £1,500 and owe money to more than one creditor. If however, people have more serious financial worries, then an IVA may be best for them. The legally binding agreement between a person and their creditors should prevent them from having to enter bankruptcy and clear their debts.

By Joe White