UK Personal Debt Grows Every Four Minutes by £1m

As the UK's personal debt reaches almost epidemic proportions, figures released Credit Action reveal that personal debt is rising by £1m every four minutes.

Credit Action, a money education charity, have released figures that show that one of the main factors in the UK's rising debt, is the high cost of mortgages. The cost of owning a home in the UK has risen further due to the recent rise base rate, compounding homeowners' misery even further.

Currently, the UK's personal debt mountain stands at around £1.3 trillion pounds. Personal loans, credit cards, store cards as well as other forms of personal credit, account for a large portion of this debt out-with mortgages.

However, mortgages do account for the largest portion of collective personal debt, totalling around £1 trillion. The cost of mortgages rose again when the Bank of England raised the base rate to 5.25 per cent, the third rise in six months.

Keith Tondeur, a spokesperson for Credit Action, said: "Property looks like a very attractive investment in the UK, but not if the investment is more than you can realistically afford."

Taking mortgages out of the equation, the average Brit owes around £4,511, which includes overdrafts, credit and store cards, personal loans and catalogues. Many of these forms of credit charge high rates of interest and this is often compounded by people making minimum monthly repayments towards these debts.

Subsequently, the Office of Fair Trading (OFT), has investigated newspaper and website adverts by lenders to see if they are misleading the public over their products. As a result of this investigation, the OFT has issued a warning to 17 of the firms subject to the investigation, that their adverts could potentially mislead customers, especially with regards to individual voluntary arrangements.

Alisdair Milton
19th January 2007

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