I remember. Mum used to get herself in debt every year just so I could have the presents that I wanted for Christmas. Wow.
Fast forward to this week and the Governor of the Bank of England has demanded UK banks to raise and hold additional funds due to the worryingly high levels of consumer credit in the economy right now.
The UK consumer credit market in the UK is said to be around 200bn and this is separate from the mortgage market (worth 1.4 trillion).
Another view; at the start of 2017, the average UK household held £13,200 in unsecured debt. I don’t have the latest figures but I doubt it has gone down.
Clearly we have a problem with debt in this country but why is that bad?
Debt comes at a cost, which is interest. The higher the rate of interest, the more you have to pay on top of the original amount borrowed. As the debt continues, the interest has more time to compound and grow exponentially.
Credit cards in particular are designed to make us debt slaves. they ask us to repay a small amount each month (normally 2%) whilst charging an interest rate much higher which is divided by the days in the year and calculated daily!
Becoming trapped in debt is easy if borrowing is not well thought out. If your struggling with debt then let a friend know or at least check out one of the following support resources
The best way to avoid debt is to pay yourself first and save. A small amount saved each month means that you put something away for a difficult time and you benefit from interest. Yes, I do know interest on savings is pitiful these days but good habits are important.
If you’ve liked this post, then your friends probably will to. Drop it in the group chat with my regards. Why not make it Debt vs Us?