20 September 2007
Young people in the UK have been "educated into debt but not about debt", Credit Action has claimed.
The national money education charity said that the government needs to act quickly to step up efforts to educate young people about the pitfalls of personal debt accrued through credit cards and money mismanagement.
It claimed that such an approach would be more effective than increased government regulation of the sector.
The organisation's comments come at a time of 'credit crunch' in which turbulence in the credit markets witnessed the US central bank cutting interest rates, as well as the UK government assisting mortgage lender Northern Rock.
While Chris Tapp, Deputy Director of Credit Action said that the current economic climate may create difficulties for many people, he added that young people may now realise that borrowing is not a financial panacea.
"If people were better educated as to the risks and people were able to manage their money more carefully than they do now then that would go a long way to helping people stay more in control, and I think that would be more effective than further regulation," he said.
"If the credit crunch helps people to wake up and really think seriously about how they are managing their money and how they are managing their borrowing then that would be a good thing.
"I wouldn't say that would make the credit crunch a good thing but there could be good things to come out of it," he added.
Recent figures from the National Union of Students estimate student debt for young people upon graduation could rise to £33,708 by 2010, due to top-up fees and increased cost of living.
Figures from Credit Action show average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans now stands at £4,515 per average UK adult.
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