Personal Debt in the UK

The total personal debt in the UK is £100 billion more than the population realise.  Market analyst Mintel said people are “burying their heads in the sand” when it comes to debt.  Individuals owe double on credit cards, loans and overdrafts as they thought they did.

The average person believes they owe £5,251 in unsecured debt. However,  the Bank of England reports that the real total is £10,300. Only one in five is worried about their debt.

People with a mortgage were more likely to budget and track their debts. Homeowners believe they are £92,200 in the red, when the actual figure was close to £95,000.

Toby Clark, senior finance analyst at Mintel, said: “While Britons do seem to have a good grasp of their mortgage borrowing, they are wildly under-estimating 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.”

“Without a detailed understanding of exactly how much they owe and what rates they are paying, it is easy to see how the situation could spiral out of control.”

Low-income households will struggle with more debt than high-income ones. Households earning less than £15,000 borrow money to pay their daily bills.

This forces many to borrow more money, at high interest rates, to pay their debts. Most of this debt is on bad credit loans.