“Credit explosion” responsible for significant UK debt

The popularity of borrowing beyond one's means towards the latter part of the previous decade prior to the credit crunch has been blamed for the debt situation the UK is in today.

This is according to Justin Modray of independent, impartial financial advice website candidmoney.com, who claimed households with unsecured debts owe an average of £15,500 each.

He stated: "The credit explosion over the last decade leaves little doubt that many people have overstretched their borrowing to fund their everyday lives."

Mr Modray added, however that lenders have now removed themselves from their greedy former lives and have now become more scrupulous about how much credit they allow customers – if any.

Indeed, borrowing rates have slowed, which may also be to do with the fact consumers have been scared into tightening their belts as they face tax hikes and spending cuts, he added.

"I fear the buy-now-pay-later culture persists, but hopefully to a lesser extent than before," the expert concluded.

Mr Modray's comments follow a worrying study by moneysupermarket.com, which found a quarter of Brits are relying on their credit cards to tide them over until the next pay day, with such people resorting to their flexible friend on average on the 21st day after having their wages put into their bank account.

Consumers who find themselves in such a position should carefully budget their incomings and outgoings and calculate what they think they spend to compared to what they really do.

This is according to Money Advice Trust spokesman Paul Crayston, who said if these comparisons do not match, then the situation needs to be looked into more seriously to reduce the risk of debt issues arising.

By Joe White