28 November 2007
Britons are preparing to tighten their belts - with over a third found to be concerned with the apparent economic slowdown in the UK.
A study from uSwitch, released today, shows that the "credit bubble" might have burst in the wake of this summer's global financial crisis - which caused the collapse of Northern Rock earlier this year.
Due to banks raising the rates at which they lend to each other - also caused by the economic uncertainty - consumers are finding it much harder to take out personal loans and credit cards.
The uSwitch research found that consumers are defaulting on their personal loans in far higher rates.
Write-offs from banks on unsecured loans rose from £3.8 billion to £6.6 billion between 2004 and 2006 - a figure worsening still further for the first half of 2007, which has seen write-offs totalling £3.7 billion..
Director of Consumer Policy at uSwitch Ann Robinson commented: "This is crunch time for the consumer and it couldn't come at a worse time of year - the days of easy credit and the 'buy now pay later' culture may be numbered, but they will leave a painful reminder for those struggling with debt."
Indeed, the uSwitch research shows that 53% of Britons' salaries is currently taken up with mortgage, loan and credit card repayments.
As a result, customers are facing money worries - with 23% saying that they are more worried about money than they were a year ago.
Ms Robinson added: "More than half our take home pay is now eaten up by debt repayments, but our ability to repay and manage this debt is clearly faltering - the banks are being forced to write-off vast sums and, as a result, they are tightening their lending belts.
"This means that credit will become both harder for customers to get and more expensive."
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