The Consumer credit service have expressed concerns over low income families gathering excessive amounts of unsecured loan and credit card debt.
The Consumer Credit Counselling Service (CCCS) has revealed that the high levels of unsecured personal loan debt and credit card debt, held by people on low incomes, are of major concern.
The CCCS reported that, on average, someone with an annual income of under £13,500 has unsecured loan or credit card debt of £12,870, raising some real concerns for vulnerable borrowers.
The report also suggests that, of this group, the unsecured debt to income ratio is almost 200% of their annual income.
Consequently it is a lot harder for low income earners to repay credit card balances and personal loans.
Director of external affairs at CCCS, Delroy Corinaldi, commented:
“Unmanageable debt is a problem across all income groups, but those on low incomes are particularly financially vulnerable.”
Mr Corinaldi went on to add that he is also “concerned about the use of credit by many on low incomes and fear that many are using it to pay for day-to-day living expenses, which is an unhealthy use of credit.”
Using free services such as CCCS or the Money Advisory Service is strongly recommended to consumers as it can help them to manage their money better and control their borrowing to avoid getting into further debt.
Consumers who are struggling with debt are advised to seek debt counselling through these services or could look to consolidate their existing debts into a debt management plan.
