Families owe half of annual income

Families owe half of annual income

Insurance company Aviva has revealed that over half of UK families have unsecured debts amounting to half their annual income.

With food, transport and energy costs soaring, fifty-two per cent of UK families owe £10,604 on average, on loans, credit cards, overdrafts and other unsecured debts.

This represents nearly half the annual household income of £23,796, according to Aviva’s Family Finances Report.

The rising cost of living is far outstripping any increase in monthly income, and many families are unable to fund holidays or activities for their children.

Paul Goodwin, Aviva’s director of workplace savings, said: “Incomes have only risen by £46 since January so to make ends meet, we have found that UK families are cutting out luxuries, economising on spending and reducing the typical amount they save.”

Average monthly savings fell to £19 in November, their lowest level this year.

Along with the increase in personal debt, more and more bogus debt management companies are springing up on the Internet and consumer groups are warning people not to be taken in by them.

A report by BBC News Bristol highlights the case of a man who paid £100 to apply for a loan from quickcashloansuk.co.uk.

The loan never materialised and quickcashloansuk.co.uk disappeared without trace.

In 2010 – 2011 the Citizens Advice Bureaux dealt with over 3,000 problems caused by rogue debt management services, including excessive fees, inappropriate debt advice and solutions which forced people further into debt.

Advice on debt is available for free from the Citizens Advice Bureaux and other independent debt advice charities.

However, some scammers are feeding on people’s trust in the Citizens Advice service and there have been reports of people claiming to be from Citizens Advice cold calling members of the public and offering to set up debt management plans.

Citizens Advices warns people to be on their guard and not to be taken in by the scam, as they would never make a cold call of this sort.

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