Research is showing that household debt in the UK continues to grow at astronomical rates, and the government is trying to curb the trend and find solutions to this growing overspending epidemic. According to recent research, the average debt for UK citizens is now reaching a whopping £60,000, and there are no signs of this slowing down. Over this year, the average citizen has accrued an additional £870 in debt. This new reality has given rise to a whole host of alternative lending solutions and more demand than ever for debt management services. It’s also changing the relationship UK citizens have with finances and prompting more of them to adjust their spending habits accordingly.
Personal Debt Behind the Rise in Bankruptcies
It has been reported that over 270 people per day are currently forced to declare bankruptcy due to their high personal debt load. Credit card spending is also a main culprit in the country, which reached a grand total of £17b in the month of October alone. Charities and financial organisations are trying to help UK citizens be more aware of the dangers of credit card debt and look for alternatives instead.
The Rise of Alternative Lending Options
Lower credit scores and availability has given rise to a variety of alternative lending options that allow UK citizens to access favourable loans even with a less than stellar credit situation. Online lenders in particular tend to be more lenient with terms and allow applicants to apply for short term loans much more easily. Online loan brokerage services will even allow applicants to apply at one place and save them the trouble of having to look online for loans by connecting them with a wide variety of different lenders. This allows people with a rocky credit history to access the best interest rates and get a loan that works within their terms. The process is also much simpler than traditional lending solutions and the speed and ease through which applicants can access their funds is another reason many decide to turn to online lenders such as Cash Lady instead.
Low Income Households are Suffering the Most
PriceWaterhouseCoopers analysts also found out that low income households are the hardest hit when it comes to household debt and are also the most affected by the rise in interest rates. Debt levels are increasing at a much higher rate than economic growth, which is a growing cause of concern.
Problem is Not Limited to the UK
However, this issue is not limited to the UK, but is actually part of a bigger trend globally. Debt rates have been soaring worldwide and are at risk of causing a global financial crisis. More and more households are now feeling the crunch and find themselves unable to pay prior debt while accumulating more debt to cope with their immediate needs.
Consumer debt is a growing cause for concern for officials and we can expect more and more actions to be taken to resolve the situation. Either way, monitoring consumer spending is something each and every one of us have to be mindful of if we want to see any change.