Brits 'spending thousands servicing debt'

Households in Britain will spend an average of £5,000 over the coming year, simply paying off the interest on loans, it has been reported.

According to the Precious Plastic report, published by professional services firm PricewaterhouseCoopers PwC this week, this amount will make no inroad into the actual debts themselves.

The study indicates that while most consumers have avoided increasing the amount they owe during the recession, debt levels remain significantly high.

Of the total income of UK households, approximately 15 per cent must be spent servicing loans, PwC says – potentially meaning some consumers should be seeking advice on debt.

Richard Thompson, a partner at PwC, said that over the last 12 months there has at least been "a cooling passion" for plastic spending.

He added: "Credit card borrowing has fallen by three per cent to £64 billion and the number of cards in circulation has fallen by eight per cent.

"We are likely to see credit cards being reinvented as payment rather than borrowing tools."

Jessica Bown, of Talk About Debt, claimed this week that it is "essential" for people to seek free advice at an early stage if they are having money problems.

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2009-11-11 13:12:41 © Moneyextra.com