By Daniel Hunter
More than 20 million people — equivalent to half (50%) the adult population of Britain — are concerned about their current level of debt, up from 42% in February, according to the latest survey of GB personal debt by R3, the insolvency trade body.
One fifth (21%) of GB adults say they are 'very' or 'extremely' worried about their current debts, up from just 12% in February.
42% of GB adults say they struggle to make it to payday, of whom the vast majority (67%) blame the rising cost of living for their financial difficulties.
"Although the economy is starting to pick up, many families are finding themselves left behind, weighed down by the cost of the day-to-day," R3’s president Liz Bingham said.
"Many people are struggling to afford the absolute essentials. It is hard to see the situation improving over the rest of the year, especially given the run-up to Christmas coming up in the autumn.
"There is a sizeable chunk of the population in a very precarious position. They are renting, they have no savings, and they are only able to pay off the interest on their debts without making any headway into the principal. These people have no financial buffer to cope with any increase in the cost of living."
27% of GB adults — more than 12 million people — say they do not have any savings at the moment, up from 23% in February.
Additionally, the number of 'zombie debtors' — those who can only repay interest on debts, but not the principal — has climbed since February. 10% of GB adults say they are only paying interest on credit card bills, up from 7% in February. Similarly, 7% of GB adults are only paying the interest on their overdraft, up from 4% in February.
Credit cards (42% of those worried about current debts), mortgage repayments (22%), and overdrafts (20%) are the most common types of debt that worry those with financial concerns.
"Credit cards and mortgages may still be the biggest debt concerns, but their dominance has decreased over time. The credit market is becoming increasingly fragmented as traditional sources of credit become harder to access," Bingham adds.
"Other types of debt, such as payday loans, have become established as a concern for those with money worries over the past few years as their popularity has risen."
10% of those worried about current debts said that payday loans were the debt that worried them.
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