UK consumers crippled by debt? Consumers spend far more on cigarettes or on alcohol than on credit card interest
Tomorrow, Barry Stamp, Joint Managing Director of checkmyfile.com, the UK’s leading online provider of credit reports to consumers will ask the UK’s debt advisors whether the British consumer is really over-indebted.
Stamp, also a member of the Institute of Credit Management’s Technical Advisory Committee, which gives feedback to government on changes to credit law, will show the national conference of UK debt advisors that the average UK household spends a lot more on cigarettes or on alcohol, or even on Bingo and the Lottery than they do on credit card interest, the object of so much controversy.
Stamp adds, “We hear much said about UK consumers suffering from an alleged “debt crisis”, and often read anecdotal evidence of credit horror stories, but a widespread “debt crisis” is simply not supported by fact.
“The latest Family Spending Survey, carried out by the National Statistics Office, shows the average UK household spends £1.70 on credit card interest each week, but it also spends £4.40 on cigarettes, £6.60 on alcohol, and £2.70 on playing Bingo and the Lottery.
“The government’s own statistics, in a recent DTI consultation document, believes that 4% of the UK population is over-indebted. That leaves 96% of consumers who are able to meet their financial commitments.
“Consumers have the freedom to contract the credit they need to live the lifestyle they choose. Yet only around 1 in 20 UK consumers are classed as “over-indebted,” but that compares to 1 in 13 who abuse alcohol.”
The latest credit industry (APACS) figures also show that 59% of credit cards are paid off in full each month, providing the UK consumer with a convenient way to manage their cash flow and consumers are now concentrating more on paying off their credit cards than they are on spending on them.
“These figures don’t tell me Britain is suffering from a debt crisis fuelled by credit card spending,” adds Stamp. “Instead, they show that UK consumers are, in the main, able to manage their financial affairs well.”
Stamp will also tell debt advisers that those Brits who are feeling the financial heat at the moment are as likely to be suffering from unregulated and dramatic rises in fuel, water and council tax bills that have gone unchecked, than they are from credit worries. Just because a consumer has had to borrow to pay higher tax and fuel bills doesn’t mean that the source of the problem lies with credit availability.”
“Since the 1970s average mortgage rates have fallen from 12% to 5% and credit card costs have dropped by 36%. In contrast, the tax burden on the average man in the street has increased from 35% to 40%. Utility and council tax bills have also increased significantly ahead of inflation. We should be blaming heating costs and council tax bills, not credit, for pressure on consumers. It is so much easier t to blame credit companies for any consumer pain than look properly into the reasons underlying financial pressure.”
“The credit industry has always been a soft target for claims of making credit too freely available, but let’s not forget that it employs over 100,000, and contributes £8bn in taxes each year and has benefited the economy to the tune of £22bn over the past 3 years. If credit is so easy, then how is it we can have the concept of financial exclusion? And can anyone explain why it is that 3 in every 4 credit card applications are routinely declined? The figures just do not support the argument. Our enviable stable economy is driven by a long-standing GDP growth of around 2.5% - the majority of which is down to consumer spending and borrowing. Without consumers borrowing as they do, the National Debt would rise, taxes would have to rise significantly, and we would no longer enjoy the low interest rate environment that keeps our mortgage costs so affordable.” Stamp argues.
Barry Stamp, Fellow of the Institute of Credit Management, is seconding a motion proposed by Eric Leenders of The British Bankers Association at the Money Advisers Liaison Group Conference, at the Institute of Electrical Engineering, Savoy Place, Embankment, London on Wednesday, entitled:
“The house believes that over-indebtedness is not a problem.”
Ref:
http://www.checkmyfile.com/content.asp? ... icle&aid=6
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