A new survey has found that a significant proportion of people in the UK think it’s too easy to get into debt.
Online research from TDX Group, an Equifax company, adds an interesting new angle to rising consumer debt levels in the UK: the consumer perspective. Of 1,005 adults surveyed in late February this year, 45 per cent said that it is too easy to get into debt.
A further 20 per cent said that banks and other lenders must be stricter about the amount they lend to consumers.
The research comes after a year in which the Bank of England and other entities issued various warnings about rising consumer debt levels. Meanwhile, in the P2P lending industry, signs of rising default levels have cropped up in the loanbooks of consumer loan specialists, such as Zopa.
In September last year, a study by alternative credit reference agency Aire suggested that almost a third of credit card and personal loan debt – worth up to £35bn – sits with people who have low financial maturity.
The new TDX survey, conducted with Gorkana, found that 68 per cent of people think a monthly debt repayment of more than 10 per cent of their salary would be unmanageable.
Of those with outstanding loans, 25 per cent view unexpected bills as the greatest threat to managing repayments, while 20 per cent see increased living costs as the chief risk. Were their debt levels to spiral out of control, 27 per cent of those surveyed would turn to friends and family for help; interestingly, 32 per cent of women would follow this course, versus 22 per cent of men.
“Personal debt is continuously on the up in the UK and it’s increasingly important consumers are aware of their debt levels, only taking on loans they can afford to repay,” said Richard Haymes, head of financial difficulties at TDX Group.
“The high number of consumers who think it’s too easy to become saddled with high levels of debt, illustrates banks and other lenders still have their work cut out to ensure they only lend to those who can afford it.”
The new survey also contained insights about consumer attitudes towards banking services. Of those surveyed, 47 per cent believe bank accounts should be free, and 83 per cent wouldn’t pay a monthly fee to their bank in exchange for lower fees on overdrafts and overseas spending. This statistic is likely to pique the interest of digital banks, as a number of these firms are busily attempting to roll out premium accounts for users.
Join AltFi at their fourth annual Australasia Summit to examine the future of lending in Australia. Where we present best practices across, technology, partnerships, open banking, governance, data access, consumer experience, capital markets & funding, the role of government and regulation.