Debt consolidation may be needed as public worries grow

Britons are getting increasingly concerned about their levels of personal debt, a new survey has revealed.

A poll by insolvency practitioners' …

Britons are getting increasingly concerned about their levels of personal debt, a new survey has revealed.

A poll by insolvency practitioners' body R3 has shown 47 per cent of consumers are concerned about how much they owe, seven per cent more than a year ago.

Fewer people are concerned about normal bank loans (down two per cent) and mortgages (four per cent), but more are troubled by hire purchases, store cards and short-term loans.

R3 president Frances Coulson said: "Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions.

"Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control."

By contrast, she noted, people are less concerned about mortgages due to the persistently low base rate.

Ms Coulson said those who have the worst debt problems in the next few months may include public sector workers as austerity cuts continue to bite, since many more of them could lose their jobs through redundancy.

Public sector employees are also experiencing a pay freeze, except for those earning under £21,000 a year.

Ms Coulson has not been the only expert to recently note the tendency of some people to take on short-term deals like payday loans when they cannot secure credit through any other means.

Co-founder of Save Our Savers Jason Riddle recently said people should not seek to use such loans unless they have absolutely no alternative.

By Joe White
 

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