‘Friend debt’ adding to money concerns?

People in the UK may be exacerbating their debt concerns by continuing to borrow money from their friends, new research has indicated.

Carried out …

People in the UK may be exacerbating their debt concerns by continuing to borrow money from their friends, new research has indicated.

Carried out by the Post Office, the study revealed the effects of the recession have resulted in a new type of lending to emerge – the ‘bank of friends‘.

It showed individuals in the UK have borrowed more than £7 billion from their mates to cover the gaps in their income.

The investigation focused on lending between adults and discovered more than a quarter of those surveyed (26 per cent) have given money to an average of four pals in the last 12 months with a view to receiving the cash back at a later date.

It was worked out that the average amount of each instance was £133.

However, the report found less than half the money handed out has been repaid – meaning there is still an outstanding balance of just under £3 billion owed between friends.

Moreover, it was shown 18 per cent of respondents are lending more money than they can actually afford, while 19 per cent cannot remember the amount they presented to their mates.

And instead of paying the amount back in cash, friends appear to be settling the sum through other means, such as alcohol, a favour in return and a thank you card.

Doug Strachan, director of financial services at the organisation, said: “The Post Office is urging people to make sure they don’t put themselves, or their household, into financial difficulty when helping others.”

Research recently conducted by The Co-operative Electrical found many under-35s are willing to borrow money to fund their Christmas spending this year.

By James Francis

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