UK personal debt has now reached “tipping point” according to a recent report from moneysupermarket.com.
The head of loans and debts at the comparison website, Tim Ross, says that the problem has been compounded by recent changes to the taxation system in this country. The average UK personal debt is now £8,400 but people don’t see debt as a major concern until they owe at least £9,700. Even worse than that, the majority of people, including umbrella company contractors, in debt do not seek professional advice until they owe at least £19,478.
Personal finances are being squeezed more than ever as the cost of living soars, taxation limits change and certain benefits are removed.
It’s hard enough to make ends meet without having to juggle debt repayments, Moss continued. Men appear to be less concerned about debt than women and it is a great cause for concern that it takes an extra £4,500 worth of debt before they worry.
Around 10% of people in debt can only afford the bare minimum monthly payment to avoid penalty charges. Unsecured loans tend to come with high interest rates and just paying the monthly minimum does not make significant inroads into reducing the debt.
The problem is likely to escalate later this year as the government austerity measures really start to bite. Interest rates have been held at a historic low for more than 2 years, but that situation cannot last for much longer and once rates rise, a lot of mortgage holders will see their monthly repayments increase as well, adding more financial misery to homeowners.
Mr Ross advises anyone with debt problems, including contractors, to seek professional help as soon as possible.
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