More than 16million Brits have less than £100 held in savings, and at least 17million do not pay off their monthly balance on credit cards.
The figures revealed in a recent government official report indicates that consumers are living way beyond their means.
The study, published by the Financial Conduct Authority (FCA), is an indictment of the UK’s debt-fuelled economy. It goes on to say that low-interest rates and ease of access to cheap money must come to an end.
Labour MP John Mann, a member of the Treasury Select Committee, said: ‘There is a huge crisis with personal debt that the Government has ignored for far too long.’
‘We need to make sure that vulnerable customers are not taken advantage of.’
David Gordon, an independent financial adviser, says: ‘It can come as no surprise that people are saving less. With interest rates on savings accounts so low, there is clearly little incentive for the ordinary working family to invest’.
‘But this is a serious problem and one that can only get worse. The government must do more to encourage people to save and invest money for their future.’
But people can be quite gullible, the big banks tempt shoppers to spend beyond their means. Credit card deals at ultra-low rates and interest-free periods – up to 30 months – are largely to blame.
ALMOST 17 MILLION PEOPLE LIVING ON A KNIFE EDGE
Research by the Government-backed Money Advice Service found that 40% of working-age people – 16.8million – had less than £100 in savings. Around 30million people regularly use credit cards and 58% – 17.4million – fail to pay off their balances each month.
In 2014 an FCA study found that 2.1million were either in arrears or had defaulted on their payments. There is no indication that this situation has improved since then.
Another 2million consumers had spent 90% of available credit, suggesting they were “only just managing”. 1.6million people were only making minimum repayments – meaning it could take decades to clear their debts.
Of course, this is great business for the banks who reap millions in interest from some of the most vulnerable people in our society.
FCA boss Andrew Bailey claims that that demand for credit is higher than what is ‘sustainable or sensible’.
Credit card debt has risen at the fastest rate for 11 years. British families now owe a record £67.3billion on credit cards, which equates to about £2,500 per household.
David Gordon says: ‘The most worrying thing is that with no ‘rainy day’ money available to so many people, it only takes one small emergency to throw a family or individual into a downward-spiralling crisis.’
‘It’s a trend that shows no sign of changing.’
‘Not only is it a worry that so many people have virtually no surplus cash but they’re not putting anything away for their retirement either.’