Crisis looms as unsecured consumer debt soars
Consumer borrowing could surpass £340bn by the end of the decade to the equivalent of £12,500 per household by 2020, according to PwC’s Precious Plastic report, which warns younger borrowers are the most exposed.
PwC’s Simon Westcott commented: “Despite the uncertainty created by political upheaval, a number of macro-economic factors have combined to create a climate of rising consumer confidence and borrowing”.
The report showed that levels of unsecured debt have already reached a record high of £300 billion and that unsecured debt per household is also at an all time high of £11,000.
According to the accountants at PWC, 75% of the growth in unsecured lending comes from student debt, credit cards and financing.
Unsecured debt is growing by £79 million a day and has grown by 11% in the last year which is at least three times faster than any of the last five years.
With interest rates potentially set to rise with inflation at over 3%, this should be of concern.
With the economy set to slow and Brexit also clouding the issue, rising unsecured debt could become a serious issue.
Adults aged 25 to 34 are three times more likely to rely on unsecured debt to fund the spending on essential items and also have lower rates of asset ownership such as homes on which to secure their debts.
Do you supply on credit to those who could be vulnerable?
CPA doesn’t work with pay day loan providers, banks or credit card companies, rather it works predominantly with the SME market on invoiced debt. However members of the Credit Protection Association will as always be concerned at news of such systematic issues within the credit market and want to take steps to act responsibly and prudently when dealing with those who could be affected.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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