Household debt continues to rise in 2013

The average household debt rose slightly in February, according to new data from Credit Action.

Average household debt (including mortgages) stood at £54,017 in February – up from a revised £53,986 in January – showing people are still struggling with their finances.

Borrowing actually stabilised in February, with the average amount rising from a revised £3,215 in January to £3,218 in February. This slight increase potentially shows many people are still finding it hard to get out of their overdrafts and pay off credit card debt.

Some 28 million card purchase transactions were made every day in January 2013, with a combined value of £1.373 billion.

Based on the trends of February 2013, this increased amount of personal debt is causing people to pay a total of £60.6 billion in interest over 12 months – around £166 million a day. This means households in the pay an average of £2,299 in annual interest repayments.

Lending from banks also increased in February, rising by £1.5 billion overall, including net secured lending, which grew by £900 million, and net consumer credit lending, which increased by £600 million.

Credit Action found 277 people are being declared bankrupt every day, the equivalent of one every five minutes and 12 seconds. Furthermore, 1,374 Consumer County Court Judgements (CCJs) are being issued on a daily basis – the average value of a Consumer CCJ in the final quarter of 2012 was £2,615.

Outstanding personal debt stood at £1.424 trillion at the end of February 2013, up from £1.408 trillion at the end of the same month last year. Worryingly, people now owe nearly as much as the entire country produced during the whole of 2012.

As times get increasingly difficult, it is expected that many people in the UK will turn to debt solutions. With a rise in the amount people owe, several are taking up debt consolidation loans in order to better manage their money.

By Joe White

Find out more about money management on the ClearDebt blog.