Personal debt goes up by 40 percent

January 15th 2016
By: Melanie Hollidge
Personal debt goes up by 40 percent

News from Aviva that household debt has soared more than 40% in the last six months was quite unsettling. According to Aviva the average family now has £13,520 of personal debt, a figure that has risen sharply from £9.520 last summer.
Included in these debt is credit card, overdrafts, personal loans, store cards, and money borrowed from family. It doesn’t include mortgages.
Campaigners are worried that this debt could be a potential time bomb if interest rates start to rise as they are predicted to later this year. We’ve experienced such cheap finance over the past few years, that many people, especially young people have never experienced rate increases like we have historically.
There’s no surprise that part of this debt comes from our spending at Christmas, debts around this period rose at the fastest for nearly a decade. The bank of England data also revealed that households now owe £178.2billion on unsecured credit, this figure increased by £1.5 billion in November. This is the biggest rise in debt since 2006.
Louise Colley, managing director for protection at Aviva said: “The alarming levels of rising household debt, along with a recent reduction in income and savings levels, paints an uncertain picture for the family purse in 2016.
“With the possibility that the Bank of England could raise interest rates this year, families who have grown accustomed to cheaper credit – particularly those who have spent heavily over the Christmas period – need to ensure they are still fully prepared to manage debt repayments, as well as other monthly outgoings, should rates go up.”
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Source:The Mirror