Debt problems ‘heightened through lack of financial education’

A lack of financial education could be contributing to the debt troubles experienced by many people in the UK, new research has suggested.

The study, carried out by uSwitch.com, found individuals are losing out on nearly £250 million in charges and penalties alone because they do not understand the terms and conditions of monetary products.

It revealed 24 per cent have been penalised as a direct result of such ignorance.

Furthermore, 71 per cent of Brits highlighted a lack of basic personal finance understanding is the main cause of their debt.

With UK personal debt currently in excess of £1.5 trillion, the price comparison and switching service warned the government's decision not to bring financial education into the national curriculum could see the problem worsen.

The investigation showed less than one-in-ten respondents (seven per cent) believe Britain is sufficiently educated about money.

Moreover, four-in-ten of those questioned said the current generation is less cash-aware than ones that have gone before and seven-in-ten claimed personal finance is now a more complicated issue than it has been in the past.

The report indicated most individuals do not fully understand their monetary situation until they're 27 years old, despite many taking out products such as credit cards when they are just 18.

Director of consumer policy at the portal Ann Robinson said: "Our poor understanding of personal finance is costing us money and now looks to be getting worse with each generation."

R3 recently highlighted the level of personal insolvency is increasing across England and Wales, with the areas most affected being Torbay on the South West coast and Mansfield in Derbyshire.

Posted by Joe White