Consumer Debt doubles in a year.

WTF?_2

http://www.guardian.co.uk/money/2008/jul/07/debt.familyfinance

Consumer borrowing soared to £22.4bn in the first three months of this year - a rise of £13bn on the same period last year, according to latest research.

The Savings break survey, carried out by unbiased.co.uk, which promotes independent financial advisers, also said that consumer saving fell by £11bn to £32.7bn.

That saw the savings break - the ratio between how much consumers are borrowing (on credit cards, overdrafts and loans, but excluding mortgages) and saving - climb to 69p borrowed for every pound saved.

This compares to 29p in the same period last year, as Britons saddle themselves with more debt to meet the rising cost of living, despite tighter lending conditions.

David Elms, chief executive of unbiased.co.uk, said: "Consumers are playing double jeopardy - not only increasing the amount they are borrowing, but also reducing the amount they are saving."

So, are people finding themselves borrowing to make ends meet or just borrowing to 'maintain the lifestyle to which they have become accustomed'?

It's bad either way, but disastrous if it's the first.....

Arcaine

Probably a mix of both, one thing I do know is people are putting more 'day to day' items onto credit cards especially fuel and people who should of been saving over the last 5 years are suddenly finding their budgets stretched and are refusing to cut back. The back end of 2008 is going to get a messy, we are starting to see the high street 'like for like sales' dropping significantly, it is only a matter of time before the redundancies begin in the retail sector as they are in construction now.

dudleyboy

Of course, there is a third possibility: people are finally facing up to reality and taking charge of their finances for the first time in years (or, for some, ever).

Consequently, people are using savings to pay off large chunks of debt, using a greater proportion of their monthly disposable income to pay off debt (rather than putting money into savings), and also applying for cheaper credit (0%, LOB cards, etc) in an attempt to cut the amount they pay in interest while their debts are repaid.

At least, that's what I hope...

WTF?_2

dudleyboy wrote: »

Of course, there is a third possibility: people are finally facing up to reality and taking charge of their finances for the first time in years (or, for some, ever).

Consequently, people are using savings to pay off large chunks of debt, using a greater proportion of their monthly disposable income to pay off debt (rather than putting money into savings), and also applying for cheaper credit (0%, LOB cards, etc) in an attempt to cut the amount they pay in interest while their debts are repaid.

At least, that's what I hope...

It'd be nice to think that but since we're talking about the ratio of debt to savings going from 29% to 69% (in a year!) with 9.6bn more debt and 11bn less savings, I don't think that's what's happening.

Anyone still borrowing to consume at this stage of the game is either a moron or planning to go bankrupt anyway and deciding to do it in style and have one last blast in the process.

SouthCoast

Just an anecdote, but twice in the last week people in front of me at Tesco have had their cards declined.

m00m00

SouthCoast wrote: »

Just an anecdote, but twice in the last week people in front of me at Tesco have had their cards declined.

my girlfriends card has been declined in tesco a few times, and when she's queried it her card company has always said it's linked to fraud protection.

her card has never been declined anywhere else.

Snooze

The MEWing has ended...

Rob

lostinrates

As we are anecdote sharing, DH and I stood in Tescos, behind people talking about how hard it was with the til-person (who was obviously a friend)and how much they'd cut back, and how even this early in the month it was going on the CC, but we were truley awed by their trolley contents. People are talking cutting back but not walking it.

Dithering_Dad

!!!!!!? wrote: »

The Savings break survey, carried out by unbiased.co.uk, which promotes independent financial advisers, also said that consumer saving fell by £11bn to £32.7bn..

Perhaps people are just salting away their money in cash ISAs, Offsets, savings accounts or mortgage overpayments for the rainy day that is coming/already here.

Surely IFAs are seeing a reduction in customers seeking advice simply because you don't need a financial adviser to tell you what to do with cash savings.

JonnyBravo

lostinrates wrote: »

but we were truley awed by their trolley contents. People are talking cutting back but not walking it.

You should have seen what they bought last month......

southernscouser

!!!!!!? wrote: »

So, are people finding themselves borrowing to make ends meet or just borrowing to 'maintain the lifestyle to which they have become accustomed'?

Probably the wrong site to ask on to get a reflective outcome.