Londoners don’t worry about debt…until it hits £7,457
THE AVERAGE Londoner doesn’t start to worry about their debt until it reaches £7,457, in the latest sign that the consumer credit crisis is worsening.
According to a new survey from Salary Finance, 22 per cent of London residents would need to owe more than £10,000 before they started to “seriously” worry about their debt.
Furthermore, the average adult in London would not consider themselves to be in the red until they have borrowed more than £5,006.
More than 40 per cent of those surveyed said that having debt has become so normal that they no longer worry about it, while three in ten said that their credit card, loan or overdraft is a necessary part of their financial life.
Salary Finance calculated that the average adult in London has two credit cards with a total debt of £2,734. However, excluding student loans and mortgages, the total average amount of debt owed by Londoners is £8,807.
Read more: Brits cite £8,854 as “unmanageable” level of debt
“In today’s world it is normal for people to have some kind of debt,” said Asesh Sarkar, chief executive of Salary Finance. “However, these stats are telling, in that people are not tackling their debt until it reaches thousands of pounds, and by this stage it is causing them to worry and may be difficult to control.
“When you’re already seriously in the red, a one-off unexpected expense can cause major issues, leading to missed payments, bad credit and a situation where people are forced to turn to high interest borrowing to stay afloat.
“When people fail to tackle their debt until it is of significant worry to them, they find it much more difficult to get out of a spiral of debt.”
One in five of those surveyed said that they use their overdraft during a typical month, while the average Londoner owes £369 to their bank.
More than 70 per cent of Londoners believe that a mortgage is a ‘good’ debt to have, while 44 per cent think that student loans are ‘good’. Meanwhile, 51 per cent of those surveyed said that credit cards represent ‘bad’ debt, while 47 per cent said that they find it ‘unusual’ when someone doesn’t have a credit card.
Read more: Half of Brits started 2019 with Christmas debt
Almost half (43 per cent) of Londoners have borrowed money to buy a car, while one in 10 have taken a loan to go on holiday, and 21 per cent have borrowed cash to pay off other debts.
“The survey shows that people should be careful they don’t take a wider acceptance of debt as a reason to get out of control with their finances,” added Sarkar. “Not only does this lead to a spiral of debt and exclusion from many normal borrowing routes, but it also impacts on wellbeing, with people more likely to suffer from stress and even depression.
“We know money worries affect 40 per cent of UK employees. Getting into uncontrollable debt can be due to a lack of financial awareness, something we support with when offering our solutions to businesses and their employees. It’s vital that financial solutions are partnered with financial education to support better behaviour in the future.”
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