New research reveals that five million households are not saving enough, while almost half of UK consumers are worried about their debts.
One report, commissioned by debt charity Consumer Credit Counselling Service (CCCS), reveals that over five million UK households are not saving enough. The research by the Financial Inclusion Centre has identified 4.3 million households with no savings and 1.1 million households with savings under £1,000.
The biggest risk comes if these households suddenly face unexpected expenditure. Recent research from the Department for Business, Innovation and Skills (BIS) found that 27% of households with no savings rely on credit for everyday expenditure ‘all the time’, compared with only 9% of those with savings of £1,000 to £10,000.
Only 5.4% of people who seek help from the CCCS have any savings and the charity fears that the situation will get worse as a range of budget squeezes such as high inflation, benefit changes and wage freezes leave more people unable to save.
47% worried about their debts
Another research project, by insolvency trade body R3, has found that nearly half of UK individuals (47%) are concerned about their debts. The quarterly tracker of the nation’s finances reveals a 7% rise in debt concern, compared with this time last year.
Of those who are concerned about their debts, credit card debt continues to dominate fears for 53% of individuals, an increase of 5% on last quarter. Concern about other types of debt has also increased: Payday and other short term loans (up 2%), hire purchase (up 3%) and store cards (up 1%).
R3 president Frances Coulson commented: ‘Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions. Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control.’
Fear of redundancy is also rising and is now twice as high as this time last year. Twice as many people in the public sector fear redundancy compared with private sector workers (one in five public sector workers, compared with 9% of private sector workers).
Which? debt and repossession advice
If you’re struggling with debt, read the Which? guide How to deal with debt, including 10 reasons you should never use a commercial debt management company, together with contact details for free debt advice organisations including Citizens Advice, CCCS, National Debtline and Payplan.
For more information if you’re struggling to meet your home repayments, read the Which? guide Repossession and how to avoid it.
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