Debt levels ‘rising among young people’

A new study has suggested younger people are taking on more debt and taking more financial risks.

The latest Axa Big Money Index found that during the second quarter of the year, those aged 50 were more likely to increase their borrowing and less likely to trim it in a bid to move towards becoming debt free than they were in the opening three months of 2011.

Among the specific trends noted were those on lower incomes increasing their debt most, with 11 per cent borrowing more than in the first quarter, compared to nine per cent across the under-50s as a whole.

Only five per cent of this sub-group had increased the amount they owed in the first quarter.

Another group to undertake a notable shift were young professionals, with the number reducing their overdrafts falling from ten per cent to six per cent.

Commenting on this shift, AXA UK’s director of customer partnerships, Nick Turner said: “Caution must be urged against borrowing to make life more comfortable.”

For those who have borrowed more and paid back less, the situation may become unmanageable down the line as interest piles up and repayments increase.

In such situations, debt management help may be required, or even an individual voluntary arrangement or bankruptcy if the situation becomes completely impossible to resolve by any normal means.

Figures published this week by Credit Action revealed debt excluding mortgages is currently £8,055 per UK household, rising to £15,491 in homes where at least one member has some sort of unsecured loan.

Posted by Paul Thacker