23rd December 2013
Britons are set to kick off 2014 in the red with a significant debt hangover, owing an average of almost £3,000 on their credit card writes Philip Scott.
In addition, according to research from comparison site uSwitch, a worrying 7% of consumers will start 2014 with balances of £10,000 or more on their card.
With more than seven million still paying off debts from last Christmas the prospect of making 2014 the year to become debt-free could be a pipedream for many.
With recent warnings from the Bank of England that workers are unlikely to see decent pay rises until at least 2015, some 44% of consumers expect to take at least a year pay off their credit card debt. The survey also found that 16% of respondents may take as long as three years to settle their balance while 5% can’t imagine clearing it at all.
The numbers come despite the cutbacks made by consumers to afford Christmas this year. Over one in three, at 37% cut down on presents, a quarter, at 27%, went without a real Christmas tree and nearly one in 10, at 9% cancelled their turkey to save money this year.
Michael Ossei, personal finance expert at uSwitch says: “While some families have done well to rein in their spending this Christmas, January can be a bleak time as people struggle to manage their debt. We are feeling the strain of rising living costs and stagnant salaries. Coupled with long-term debts to cope with, we could be in for a bumpy ride.
“It’s important that people don’t fall for the easy option of short-term credit, as this could lead them further into debt. Balance transfer cards with an interest-free period could be a better solution for those needing some breathing space, but if you go down this route to manage your debt, it is vital to find the best card for your situation. Now is the time for a financial makeover and for everyone to take a long hard look at their household budget.