Borrowing on credit cards may have gone down – but the average family will still take at least 20 years to clear their unsecured loans and cards.
The latest figures from accounting and finance PricewaterhouseCoopers (PwC) reveal that the average home owes £7,900 in unsecured borrowing.
In the past year, the balance has gone down by £355, but most families are worried about keeping pace with their repayments as wages stand still but the cost of living keeps rising.
Young borrowers are most at risk, says PwC, as 25% of 25-34 year olds admit funding day-to-day living costs with their credit cards in the past 12 months.
Total household borrowing in the UK added up to £1.45 trillion.
Outstanding unsecured credit dropped £9.2 billion to £206.6 billion from 2010.
Simon Westcott, a PwC director, said: “UK consumers are among the most indebted in the world, with the average UK household still saddled with nearly £8,000 of unsecured debt.
“Although the UK government’s austerity drive appears to be hitting home, with households paying off an average of £355 worth of their debt in 2011, three years of austerity by UK consumers has only made a small dent in the total levels of borrowing.”
The survey also revealed that the number of credit cards in circulation decreased by 1 million, while payments by debit card outstripped those by cash for the first time.
The average credit card balance is £1,000.
“The longer term trend suggests the younger generation showing a preference for debit cards and emerging digital alternatives such as mobile payments,” said Wescott.
“This generation seems unlikely to switch to increased credit card usage in later life, as perhaps they would have done in the past, suggesting that debit cards, mobile payments and other innovations will force the credit card into an ever decreasing market.”
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