Extent of holiday debt causing concern
Published: 2 August 2010 By MoneyHighStreet Staff Leave a Comment
2.3 million holidaymakers in debt as they borrow more than £1,000 to finance their 2010 holiday.
Worrying figures just released by R3, the insolvency trade body, reveal that over 2 million holidaymakers will borrow an average of £1,130 to finance their holiday this year. On average, they will spend seven months paying it back.
Frances Coulson, R3 Vice-President, said “That people are prepared to take on a substantial amount of debt for such a long period of time in order to afford a holiday is worrying, especially as these are still economically uncertain times. Personal insolvency hit record levels in the first quarter of this year and looks set to rise – so we’re urging people not to spend more than they earn.”
There are remarkable geographical and age differences in the amount that people are prepared to borrow for holidays. The research shows that Scottish holidaymakers are the most likely to borrow, with twelve percent admitting that they are prepared to finance their 2010 holiday using debt. Londoners are nearly as willing to get into debt, with ten percent saying that the cost of their holiday would be covered by borrowing. In comparison, only three percent of holidaymakers in the North West, Yorkshire and Humberside and the West Midlands are prepared to borrow money for a holiday.
The age group most willing to borrow for a holiday is the 16 to 24 year olds, with the 65+ age group being the least likely.
Coulson concluded that “The figures point to a clear generational split in attitudes to borrowing and debt. We must continue to promote the idea that saving, rather than borrowing, to pay for luxuries is the best way to avoid a life dogged by financial problems.”
Delroy Corinaldi, a director at the charity Consumer Credit Counselling Service, said: “Unemployment and pressures on the public purse will ensure the problem of over-indebtedness continues. The crux of the problem will not be about levels of debt but ability to repay, particularly if and when interest rates go up.”
Household finances are likely to be squeezed further because of George Osborne’s Emergency Budget. VAT will rise from 17.5 per cent to 20 per cent, while up to 700,000 more workers are to pay higher rate income tax after the threshold was lowered.
If you are concerned about your debts, you may want get some professional debt advice to find out what options are available.