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For immediate release: Tuesday, 2 May 2006
In-depth debt research by Thomas Charles reveals true extent of UK Debt
On a radio program on debt called 'You and Yours'
on BBC Radio 4 it was confirmed that these latest stats from Thomas
Charles are accurate and in line with surveys conducted
by the Bank of England, listen to broadcast here:
BBC 4 Radio, 5th May
- 8 million adults have unsecured debts of £10,000 and over; 3.8 million £20,000 and over
- Nearly a quarter (23%) of those have secured debts in excess of £100,000
- Over half (55%) owe more than £5,000 on their credit cards
- Two thirds have a personal loan, 57% of whom owe more than £10,000
- 82% of under 25s have a student loan at an average of £12,800
- 16% have a hire purchase agreement, a car being the most popular (58%) 45% have an overdraft at an average amount of £1850
Thomas Charles (www.thomascharles.com), the leading debt solutions consultancy, has commissioned a major piece of research into the extent and nature of debt in Great Britain. The research was conducted by YouGov. Via preliminary omnibus research it was established that 19% of the adult population, around 8 million, have unsecured debts of £10,000 and over. These debt levels are consistent across demographics with little gender, regional or social grade differences. The breakdown is as follows:
- Unsecured debts of £10-15K = 6% of adult population
- £15-20K = 4%
- £20-30K = 4%
- £30K and over = 5%
That’s 3.8 million adults with unsecured debt of over £20,000.
Of the group of 19% with unsecured debts of £10,000 or more, in-depth research was conducted on a sample of 1366 to examine the scale and type of debt they have, how much they are repaying on a regular basis, the reasons for their debt, how they aim to get out of debt, and how debt has affected their lives: health, relationships, work etc.
The sample was split evenly five ways between the four debt levels above and those under the £10,000 level. A host of interesting statistics and information emerges.
James Falla, Director of Thomas Charles, commented:
“We believe this is the first time such a large number of people with high debt levels has been interviewed in great depth. The results reveal a comprehensive picture of the unsecured debt scenario in Great Britain. There are detailed analyses of the different types of debt: credit/store cards; personal loans; student loans; hire purchase agreements; and overdrafts. We also gain a picture of the future in terms of further debt expected to be incurred, what purchases it will be used for, and how long it will take to repay debts.
We also gain fascinating insights into why people incur such high unsecured debt, how many are having difficulty repaying their debts and where they go for help, and even how it has affected their health, relationships and work.”
Unsecured v Secured Debt
Perhaps not surprisingly, the people with the highest levels of unsecured debt also have the highest levels of secured debt. 43% (3.4 million) have secured debts of £50,000 or over. That jumps to 59% for those with unsecured debts of £30,000 and over. 23% (1.8 million) of adults owe more than £100,000 in secured debt, 30% in London. 22% have secured debts of £10,000 to £50,000, and 30% less than £10,000.
Under 25s proportionately have the highest levels of unsecured debt. 71% of them owe between £10,000 and £30,000 compared to 54% of the sample. London is the area with the highest level of unsecured debt. 19% of Londoners owe more than £30,000 compared to an average of 14%. A third (33%) pays back between £250 and £500 per month.
Credit/Store Cards
78% of people have credit/store cards with 55% having 3 or more cards and 3% having 10 or over. A fifth of adults owe between £5000 and £10,000 on their cards, 12% between £10,000 and £15,000 and 21% over £15,000.
18% of credit card holders only pay off a minimal amount each month. 14% pay between £50 and £100, 20% between £100 and £250, and 21% between £250 and £500. 34% of those with credit cards regularly apply for new ones to take advantage of low interest rates.
Personal Loans
Two-thirds (66%) of adults have personal loans. Two thirds have one loan but a quarter (26%) have two and 8% three or more. This latter figure rises to 19% among divorced people and 25% amongst those with unsecured debts of £30,000 and more.
4.6 million (57%) owe more than £10,000 on their loans. 23% owe between £10,000 and £15,000, 17% between £15,000 and £20,000, and 16% over £20,000. They pay off an average of £495 per month. Three quarters (76%) have their personal loan with a bank and fifth (21%) with a private loan company.
Student Loans
26% have student loans with a heavy bias towards the younger age groups (82% of under 25s and 42% of 25-30 year olds). Understandably this group is also biased towards those who are unemployed (35%) and living in rented accommodation (54%). The average level of student debt is £10,000, rising to £12,800 for under 25s. Over half (55%) don’t pay anything off per month, with most of the rest paying between £50 and £200.
James Falla continued:
“Compared to even just a few years ago, we can see the enormous uptake of unsecured debt across all areas: credit cards, personal loans, student loans. This puts literally millions on the borderline. If interest rates rise or unemployment goes up, or if individuals suffer an illness or loss of income, their debts can quickly spiral out of control.Personal insolvency is up 57% year on year. The number of IVAs is up a staggering 117% year on year and now accounts for a third of all insolvencies, compared to a quarter just a year ago. The biggest change in the last 10 years or so has been the number of young people in financial difficulty and, as our research shows, with under 25s having an average student loan of £12,800, this problem is a nearly always a direct legacy from their student loan commitments.
Whilst most people are happy to put their hands up and admit to overspending, an increasing number are looking to the government or lenders to also take some responsibility and provide some help. According to our research, nearly half believe the government and lenders should provide better education on debt and 81% believe that lenders are irresponsible in their approach to making credit available.”
Hire Purchase Agreements
16% of the sample have hire purchase agreements, rising to 21% for those living in the North of England, 23% living in council housing, and 24% for those with 2 children living at home. Of those with a hire purchase agreement three quarters have only one and 25% more than one. 27% of the agreements are for amounts less than £1000, 30% between £1000 and £5000, 21% between £5000 and £10,000, and 19% over £10,000. The average monthly repayment is £185 per month. Most agreements (58%) were for the purchase of a car. Furniture (23%) and household electrical goods (23%) were the other most popular hire purchase items.
Overdrafts
45% have overdrafts, the average amount being £1,850. An average of £185 per month is repaid. Over a third (38%) don’t have a plan in terms of when they will repay their overdraft with 37% planning to repay within a year. 98% had seen an increase in their overdraft of up to £5000 over the previous five years.
Repayment Time and Future Debt
The average time respondents expect to have unsecured debts for is 6 years (9 years for under 25s), with 13% (one million) anticipating having them for over 10 years, rising to 23% earning less than £20,000 per annum and 30% for those earning less than £10,000
16% (1.3 million people) think they will go further into debt in the near future, 48% of whom by an amount between £1000 and £10,000. 31% will take out a secured loan but 33% will put it on credit cards, 27% will take out a personal loan and 23% will increase their overdrafts.
Consumers wishing to contact Thomas Charles for advice on debt can do so via the company’s website (see above) or by phone on 0800 072 5988
- Ends -
Notes to Editor
The research, conducted by YouGov in March 2006, comprised an Omnibus followed by an in-depth survey on 1336 adults, a high proportion of whom had unsecured debts of £10,000 or over.
Charts, tables and further analyses are available on request
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