Callcredit Check reveal spending on unsecured debt soars

Number of individuals spending over 50pc of their monthly income on unsecured debt repayments rises to almost one in ten.

Key statistics

• The proportion of UK adults spending over 50pc of their income on unsecured debt payments has risen to 8pc compared to 6pc reported in August 2008 and 2pc in August 2007
• The number of 25-34 year olds spending more than 50pc of their income on unsecured debt repayments has doubled since August 2008. Today more than one in 10 (12pc) spends this amount compared to 6pc in August 2008
• Women are spending a larger proportion of their income on servicing their debt than men. This peaks among women aged 24-35, with 14pc spending over half their income on unsecured debt repayment
• Over two thirds of adults are more concerned about their financial situation now than they were 12 months ago, with the over 55s the most concerned
• Almost half (45pc) of UK adults think their financial situation will worsen over the next 12 months compared to just 19pc who think it will improve
• The 25-34s are the most optimistic age group with 31pc thinking things will improve
• The over 55s are the most pessimistic age group with just 9pc thinking things will improve, compared to 57pc who believe things will get more difficult
• Women are more pessimistic than men about the future across all age groups, peaking among women over 55 years of age (59pc think their financial situation will have worsened by this time next year)

The proportion of people spending over 50pc of their monthly income on unsecured debt re-payments has risen over the past six months to 8pc, according to independent research commissioned by online credit report provider Callcredit. The same research also shows the 25-34 year old age group to be struggling the most, with more than one in ten (12pc) spending this amount on servicing debt levels - double the numbers reported in August 2008. Women appear to be hardest hit by repayment levels with 14pc of women aged 25-34 spending over half their income on unsecured debt repayment. Guidelines from the Department for Business, Enterprise and Regulatory Reform, BERR, identify the threshold for becoming over-indebted as an individual spending over 25pc of their gross monthly income on unsecured repayments.

Consumers appear worried about their financial future with two thirds (69pc) saying they are more concerned now than they were twelve months ago. Almost half (45pc) believe that their financial situation will deteriorate over the next year, compared to 19pc who think it will improve. The over 55s appear the most pessimistic group with just 9pc believing the situation will improve, compared to the 57pc who believe their circumstances will worsen.

Owen Roberts, head of www.callcreditcheck.com, comments "The worsening economic climate is having a clear effect on consumer attitudes and behavior. The increasing proportional spend on unsecured debt paints a concerning picture of consumer finances within the UK and this level of debt servicing would appear to be unsustainable.

"Our advice to any individual who is struggling with debt repayments is to speak with their lenders before things become unmanageable or contact an independent organisation such as the Consumer Credit Counselling Service to work out the best way forward."

Research information

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1962 adults. Fieldwork was undertaken between 23rd - 29th December 2008. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

About Callcredit Check

• Callcredit Check is the consumer arm of credit reference agency Callcredit, providing consumers with instant online access to their credit report and services to help them monitor their credit status.

• Callcredit is the UK's most innovative and customer-focused Credit Reference Agency, with an established reputation for service differentiation; focusing on listening to clients and creating innovative solutions that deliver real business value. Find out more at www.callcredit.co.uk

• Callcredit is one of six core businesses that form the Callcredit Information Group (CIG). CIG brings together experts across the fields of credit referencing, marketing services, interactive solutions and consultative analytics to enable our client base of businesses and consumers to make informed decisions using our innovative products and services.

The group is made up of two complementary divisions:
- Credit Solutions, encompassing Callcredit, Legatio and DecisionMetrics - specialists in credit risk, ID verification services and tracing tools.
- Marketing Solutions, providing specialist knowledge in customer analytics, consumer targeting, database building and hosting, marketing communications, business modelling and market analysis through three market leaders in their own fields: EuroDirect, Broadsystem and GMAP Consulting.