Insolvency Expert Comments On Latest R3 Research
Findings from R3’s latest personal debt snapshot report show that nearly half of people (46 per cent) nationally say they struggle to make it to payday and individuals in Yorkshire and Humberside are the most likely to struggle at 53 per cent.
According to the report, 5 million people across the UK have taken on more debt over the last few months – up from four million in the previous quarter. Worryingly, the results of the quarterly survey show that 2 million people across the UK have taken out a ‘payday’ loan in the last year.
Andrew Walker, Yorkshire regional chair of R3 and a partner at Irwin Mitchell comments: “It is extremely worrying that such a large percentage of people are struggling to make it to payday and that many are using ‘payday’ loans to bridge the gap. Our members have seen an increase in the number of financially distressed individuals whose debts include ‘payday’ loans.
“These loans tend to have high interest rates and often those who use this type of credit find themselves in a vicious debt cycle, especially if they then experience a sudden job loss. If someone is finding it difficult to pay their bills, it is good to seek financial advice before taking out further lines of credit as these stop gap measures can exacerbate the situation.”
The number of people who are worried about their debts nationally has increased by 8 per cent from 45 per cent to 53 per cent. The figures reveal that those in the public sector are most likely to worry about their debts, with 66 per cent expressing concern compared to 59 per cent who work in the private sector.
Among those who are worried about their debts, fears about credit cards continue to dominate (48 per cent). This is followed by overdraft and mortgage payments at 29 per cent and 24 per cent, respectively.
Credit card debts remain central to people’s concerns with nearly four in ten people (48 per cent) citing credit card repayments as the reason they struggle to payday. Increasingly individuals are blaming their payday struggle on Government measures such as tax rises (21 per cent) and welfare cuts (13 per cent). The number of people citing spending on going out or on non-essentials as a reason for the struggle has dropped by 8 per cent since January - now at 14 per cent.
Walker comments: “Our members frequently work with individuals who rely on their credit card to make day-to-day purchases, so it is not surprising that concern over credit card debt tops everything else. It is clear that Government measures are beginning to take its toll on the nation’s finances.
Unfortunately, as the cost of living rises, many won’t see their financial situation improve for a while. The fact that the number of people who say spending on outings and non-essentials has dropped, suggests that people are trying to rein in their spending. As times are becoming increasingly more uncertain, it is so important that people attempt to live within their means.”