Consumers 'underestimating personal debt'
Published On 20 July 2007
People in the UK could be underestimating how much money they owe on credit cards, overdrafts and personal loans, new research suggests.Data analysts Mintel asked Britons to estimate their current levels of debt and the average answer was £5,251.
However, Bank of England figures suggest that the actual debt for a UK consumer is £10,300 - suggesting the people are not taking into account all their borrowing.
In contrast, homeowners were able to estimate accurately how much they had left to pay on their mortgage - typically guessing £92,200, when actual figures suggest the amount is £95,000.
Toby Clark, a senior finance analyst at Mintel, commented: "While Brits do seem to have a good grasp of their mortgage borrowing, they are wildly underestimating the amount of money they owe on credit cards and loans.
"Clearly, it is a lot easier to keep an eye on a single mortgage than it is to juggle a couple of credit cards, a personal loan, a car loan and maybe even an overdraft as well."
Mintel's figures also indicated that people borrow money in different ways depending on their circumstances.
Those with a household income of less than £15,499 tend to take on personal unsecured debt, while richer people are more likely to borrow to buy a home or second property.
Data from Credit Action shows that personal debt in the UK exceeded £1.3 trillion in April.
