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Loans and credit cards increasingly used to pay for essentials
Usually the individuals that suffer from financial issues are those that already have credit cards and loans.
They struggle to pay their monthly payment obligations, but manage to get by. Troubles are compounded when individuals fall ill or become unemployed and, as a result, fail to meet credit agreements.
The growing trend under the current economic conditions, however, is for individuals that are financially secure to lose hours at work or become unemployed. They find themselves in a desperate situation where they have to take on debt in order to survive as prices increase while their income stagnates.
This represents an ominous form of debt that is hard to avoid for those most afflicted by the recession.
A quarter of people in the 25-34 age group admit to using credit to finance essential purchases in 2011, as evidenced by PricewaterhouseCoopers' PWC Precious Plastic 2012 Report.
"If you're using a credit card or a loan to buy food, pay rent or pay utility bills, that's a pretty sure sign that you need some advice," says Paul Crayston, the media officer at the Money Advise Trust.
UK household debt currently stands at £7,900, which leaves domestic consumers among those with the highest levels of debt in the world.
However, there are positives to draw from PwC's report.
Consumers are increasingly shying away from riskier credit cards to use debit cards, particularly amid the young. The market share for debit cards increased ten per cent in 2011, while overall credit card debt fell five per cent to an average of £1,000.
“The credit card is suffering a midlife crisis. Consumers discarded nearly one million cards in 2011, taking the number of credit cards in circulation down to levels not seen for almost a decade," explains Simon Westcott, director of PwC.
If you find you're struggling with debt contact Moneyextra. Our advice is immediate with no waiting time and no appointment needed.
Moneyextra.com recommends you take independent financial advice before acting on any article
Back2012-02-08 10:22:20 © Moneyextra.com
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