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One in four borrowers trapped in debt

Study also reveals men borrow 36% more than women

Research reveals that on average, Brits would only seek professional money advice once their debt had gone beyond £5,000

Research reveals that on average, Brits would only seek professional money advice once their debt had gone beyond £5,000

One in four consumers believe they will not be able to pay off their non-mortgage debt for at least three years, according to new research by uSwitch, which also reveals that 7% believe they’ll never be debt-free.

The news comes as the Debt Advisory Centre’s latest study shows that 25% of Brits worry about not having enough money to live on, with women twice as likely to be worried about their finances.

Despite the economy growing by 0.7% in the three months to June, consumers’ personal finances are taking longer to catch up as the effects of rising bills and stagnating wages takes its toll.

According to the research – which looks at debt excluding student loans and mortgages – four in ten say their debt has increased in the last 12 months, with the average consumer currently £2,423 in the red.

For those aged 25 to 34, the average level of debt rises to £3,385, with the age group above – 35 to 44 year olds – having an average of 7% less debt.

This data correlates with the Debt Advisory Centre’s, which found that 18 to 24 year olds were four times more likely to have financial worries than over 65s.

Debt Advisory Centre believes that being “prepared” can help ease money issues, but research shows that on average, Brits would only seek professional money advice once their debt had gone beyond £5,000.

UK debt by region and gender

Regionally, the East Midlands is the most in control of their finances with an average level of debt of £1,988, while borrowers in Yorkshire and the Humber risk spiralling levels of debt, with an average of £2,902.

Region Average Debt
East Midlands £1,988
East Anglia £1,991
North East £2,021
South East £2,246
South West £2,332
Scotland £2,353
London £2,546
West Midlands £2,632
North West £2,665
Wales £2,688
Yorkshire and the Humber £2,902

When it comes to men versus women in the borrowing stakes, men are likely to take out larger debts than women.

Further to this, and despite figures showing that they earn 25% more than women, men have borrowed an average of 36% more than women in the past 12 months.

Men also appear to be less concerned by their debt, with the research’s figures showing that men require 11% more debt than women do before beginning to worry about their finances.

Debt consolidation

uSwitch personal finance expert, Michael Ossei, believes that consumers should focus on making their debt “manageable” before thinking about taking out any further loans.

“Consolidating your debts will help you fix repayments with one provider at a rate that is more affordable over a defined time period. For example, you could borrow £3,000 for a three year period at a rate of 7% and pay back £92 a month,” he said.

As the Bank of England announced plans to tie interest rates to the nation’s unemployment figures, many experts are not expecting to see interest rates rise until 2017.

However, research from July by the Resolution Foundation found that the number of people in “perilous” debt could double if interest rates reached 3.9% by 2017.

Should interest rates increase, there are fears that borrowers will have less time to react.

Ossei suggests that balance transfer credit cards can provide “breathing space” for those looking to start taking control of their finances.

“The key is finding the cheapest deal that comes with a timeframe you can comfortably work with,” said Ossei.