Unsecured debts a problem for two-thirds of Brits

Nearly two-thirds (63 per cent) of UK adults have some form of unsecured borrowing, new research has revealed.

According to the study, conducted by MoneySuperMarket, Britons have a total of almost £139 billion in unsecured debt, with those in the 18 to 24 age-group seemingly relying more on credit than anyone else. They owe an average of £5,446 on unsecured credit, over £1,000 more than the mean average for all age categories.

Credit cards were found to be the most popular form of borrowing, with 46 per cent of those who have some form of unsecured debt using one, followed by overdrafts and personal loans, used by 24 per cent and 11 per cent respectively.

Rising debt is also a problem for many people, with 43 per cent admitting they owe more money now than they did last year – and 22 per cent of them having no debts 12 months ago but now owing an average of £1,182. However, encouragingly. half of those questioned said they owe the same or less than they did a year ago.

The research follows a similar study from The Money Charity, which found that average household debt stood at £54,332 in December, with total interest repayments on personal debts equating to £162 million per day.

Head of banking for MoneySuperMarket Kevin Mountford explained the high proportion of consumers using unsecured debt may indicate the economic recovery is not as robust as thought, adding it "makes me question how much of a real recovery we are actually seeing if people are spending on credit rather than using money they actually have".

Mr Mountford added that while low interest rates mean the cost of borrowing is currently relatively cheap, consumers who are not on fixed-rate deals could be caught out if rates rise in the future.

"I would suggest trying to pay down as much debt as you can now before rates do start to climb," he remarked.

By James Francis