Over 50s getting deeper in debt
Sandra Haurant and agencies
Wednesday August 16, 2006
Guardian Unlimited
People in their 50s are increasingly struggling with credit card debt, a debt counselling charity said today, with one person racking up a balance of £412,000 on 57 credit cards, and a government report published today warned that the number of insolvencies in the UK is likely to rise.
The Consumer Credit Counselling Service (CCCS) said that while credit card spending has slowed over the past 12 months, people aged 53 and above are the only age group still increasing their spending on plastic.
The charity has helped 155,000 clients with debt problems, and the proportion of people between the ages of 53 and 59 seeking help has risen to 23% of the total, up from 19% in 2003.
The over 53s now have the biggest outstanding credit card debt, while those in their 60s have increased their credit card borrowing by one third between 2004 and 2005.
The average outstanding credit card debt of CCCS clients is now £12,422 spread over three cards, an increase of 50% in three years. People seeking advice from the CCCS in the 53 to 59-year-old age bracket now owe on average £17,697 on credit cards, while those in their late 20s have credit card debts of £7,706.
Frances Walker, spokeswoman for CCCS, said the over 50s had grown up with credit cards, the first of which was launched 40 years ago, and so may feel more comfortable using them.
"The added pressure on people in that age group, who might be supporting their children and their own parents, as well as the rising costs of living with increased utility and council tax bills, could mean that they turn to credit cards," she said.
Walker also warned that people borrowing £2,000 and only making the minimum repayment each month would take more than 20 years to clear the debt.
The Bank of England heaped further pressure on households this month by increasing the cost of borrowing. CCCS expects credit card debt to be the major component of unsecured debt problems by 2006, and said that consumers had increasingly turned to credit cards attracted by 0% interest offers.
Last month, research from insurer Prudential showed more than a million pensioners have debts, owing an average £15,500 each. 0ne in 10 retired people admitted they owed money, with an estimated 70,000 having debts of between £50,000 and £75,000.
Over-indebtedness
This year may be a more difficult one for those already in debt, the Department for Trade and Industry's third annual report on over-indebtedness said: "Growing levels of consumer credit and the growth of those showing signs of financial distress suggest that 2006/07 may be a more challenging year for highly geared or otherwise vulnerable individuals."
The report said that solutions to over-indebtedness could only be found through "concerted and co-ordinated action from central, devolved and local government, the independent regulators, the credit and utility industries, the voluntary sector, consumer groups and individuals".
It points to government measures such as funding for financial inclusion initiatives, including £45m for more free face-to-face debt advice (AtW's comment: nice innit - first Govt gets people in debt by increasing stealth taxation and raiding pensions, but on the other hand they will spend some money on "free" debt advice.) around the UK. In addition, basic financial skills will be introduced into GCSE maths in England from 2008 and a "Money Box" initiative will offer advice to new and prospective parents on maternity and paternity rights and saving initiatives.
The Consumer Credit Act 2006, when implemented, will introduce new requirements for lenders to provide more information to debtors during the life of the loan. From April 2008, lenders will be required to provide statements about fixed-sum credit agreements, notices of sums in arrears and notices of charges (default sums) that are imposed on them.
Insolvencies on the rise
And last week, government figures showed personal bankruptcy had risen year-on-year as households struggle with soaring bills and credit card payments.
The number of individual bankruptcy petitions filed in the High Court and county courts in England and Wales between April and June rose 10% to 15,796 compared with the same quarter last year, the Department for Constitutional Affairs said.
Meanwhile, the government's Insolvency Service said a record number of people became insolvent this spring. 26,021 people in England and Wales became insolvent between April and June, the highest figure ever and well above the 15,645 in the same period last year. A further 23,653 went through the courts between January and March this year. Major high street banks have also reported soaring levels of bad debt in the UK.
Sandra Haurant and agencies
Wednesday August 16, 2006
Guardian Unlimited
People in their 50s are increasingly struggling with credit card debt, a debt counselling charity said today, with one person racking up a balance of £412,000 on 57 credit cards, and a government report published today warned that the number of insolvencies in the UK is likely to rise.
The Consumer Credit Counselling Service (CCCS) said that while credit card spending has slowed over the past 12 months, people aged 53 and above are the only age group still increasing their spending on plastic.
The charity has helped 155,000 clients with debt problems, and the proportion of people between the ages of 53 and 59 seeking help has risen to 23% of the total, up from 19% in 2003.
The over 53s now have the biggest outstanding credit card debt, while those in their 60s have increased their credit card borrowing by one third between 2004 and 2005.
The average outstanding credit card debt of CCCS clients is now £12,422 spread over three cards, an increase of 50% in three years. People seeking advice from the CCCS in the 53 to 59-year-old age bracket now owe on average £17,697 on credit cards, while those in their late 20s have credit card debts of £7,706.
Frances Walker, spokeswoman for CCCS, said the over 50s had grown up with credit cards, the first of which was launched 40 years ago, and so may feel more comfortable using them.
"The added pressure on people in that age group, who might be supporting their children and their own parents, as well as the rising costs of living with increased utility and council tax bills, could mean that they turn to credit cards," she said.
Walker also warned that people borrowing £2,000 and only making the minimum repayment each month would take more than 20 years to clear the debt.
The Bank of England heaped further pressure on households this month by increasing the cost of borrowing. CCCS expects credit card debt to be the major component of unsecured debt problems by 2006, and said that consumers had increasingly turned to credit cards attracted by 0% interest offers.
Last month, research from insurer Prudential showed more than a million pensioners have debts, owing an average £15,500 each. 0ne in 10 retired people admitted they owed money, with an estimated 70,000 having debts of between £50,000 and £75,000.
Over-indebtedness
This year may be a more difficult one for those already in debt, the Department for Trade and Industry's third annual report on over-indebtedness said: "Growing levels of consumer credit and the growth of those showing signs of financial distress suggest that 2006/07 may be a more challenging year for highly geared or otherwise vulnerable individuals."
The report said that solutions to over-indebtedness could only be found through "concerted and co-ordinated action from central, devolved and local government, the independent regulators, the credit and utility industries, the voluntary sector, consumer groups and individuals".
It points to government measures such as funding for financial inclusion initiatives, including £45m for more free face-to-face debt advice (AtW's comment: nice innit - first Govt gets people in debt by increasing stealth taxation and raiding pensions, but on the other hand they will spend some money on "free" debt advice.) around the UK. In addition, basic financial skills will be introduced into GCSE maths in England from 2008 and a "Money Box" initiative will offer advice to new and prospective parents on maternity and paternity rights and saving initiatives.
The Consumer Credit Act 2006, when implemented, will introduce new requirements for lenders to provide more information to debtors during the life of the loan. From April 2008, lenders will be required to provide statements about fixed-sum credit agreements, notices of sums in arrears and notices of charges (default sums) that are imposed on them.
Insolvencies on the rise
And last week, government figures showed personal bankruptcy had risen year-on-year as households struggle with soaring bills and credit card payments.
The number of individual bankruptcy petitions filed in the High Court and county courts in England and Wales between April and June rose 10% to 15,796 compared with the same quarter last year, the Department for Constitutional Affairs said.
Meanwhile, the government's Insolvency Service said a record number of people became insolvent this spring. 26,021 people in England and Wales became insolvent between April and June, the highest figure ever and well above the 15,645 in the same period last year. A further 23,653 went through the courts between January and March this year. Major high street banks have also reported soaring levels of bad debt in the UK.
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