Repayments on consumer debt soar

By MoneyhighStreet Staff. Published on July 1, 2008 This post currently has no comments.

Finance
As debt in the UK continues to rise, the credit crunch means that interest repayments are also soaring, a new report has shown.

Data published by the charity Credit Action showed that total personal debt in the UK reached £1.44 trillion in May, up eight per cent in the last year.

Specifically, the report noted that the average consumer owed £4,900 on credit cards, motor and retail finance deals, overdrafts and unsecured personal loans at the end of May.

When mortgages are added into the figures, the average adult in the country now owes £30,394.

What''s more, the report noted that the credit crunch has made this debt even more expensive for consumers. It said: "Britain''s interest repayments have soared to £94 billion in the last 12months. The average interest paid by each household on their total debt is approximately £3,774 each year, which has increased £300 in the last 12 months."

As a result, the researchers said that it is expected, by the end of the year, that one person will declare themselves insolvent or bankrupt every four minutes.

Recently, Scottish Widows reported that people in debt at the moment were not saving enough to cover their future.