Money News

Brits work half the week just to pay their debts

By Martin Fagan - news@consumerchoices.co.uk

People in debt spend 58% of their take home pay servicing their debts, new findings reveal.

Brits struggling to pay off debts are working until 4pm on Wednesday afternoon each week just to earn enough to repay their unsecured borrowings, according to the Consumer Credit Counselling Service (CCCS).

The charity says debtors have the remainder of the working week to earn what they need to pay for their basic living costs and their mortgage.

The CCCS says that 418,000 people got in touch last year. The average person owed a total of £22,476 on credit cards, personal loans, overdrafts and other types of unsecured debt - and faced a monthly bill of £675.52 just to meet their repayments.

This figure made up 58% of the average CCCS client's earnings of £1,173.23 a month after tax. The findings assume a 37.5 hour working week.

"With rising prices continuing to push up the cost of living, household budgets are under increasing pressure,” said Delroy Corinaldi, external affairs director at CCCS.

“These figures show how difficult it can be to escape from debt once it builds up. Our advice to anyone struggling to cope with their repayments is to seek free advice as early as possible."

In response to the growing number of people mired in debt, the government has launched an online service that aims to give UK consumers a financial healthcheck within 10 minutes.

The healthcheck is based around a series of multiple choice questions on personal budgets. It is offered by the Money Advice Service, which is backed by the government and funded by a levy on the financial services industry.

"This is the money-equivalent of a reliable sat-nav,” said Gerard Lemos, chairman of the Money Advice Service.

“We help people to see where they are now, and then we help them get from A to B by the best route for them. Most importantly, our advice is free and unbiased and we will not sell them anything.”