Earlier this week the Financial Conduct Authority (FCA) warned of a pronounced build-up of debt among young people.

Chief Executive Andrew Bailey was talking following research which showed young people in particular are concerned about the amount of debt they are carrying and their ability to repay that debt, he said:

“We should not think this is reckless borrowing, this is directed at essential living costs. It is not credit in the classic sense; it is [about] the affordability of basic living in many cases”.
This may be as a result of higher prices of renting and also a lack of income growth, resulting in people having to use credit in order to fund basic living costs. Overall the number of 18 to 34 year-olds becoming insolvent rose by 31.3% between 2015 and 2016*1.

When things are tough financially, it can seem like an easy fix to get a loan, credit card, extend your overdraft, or to get a car on finance, but the UK has seen borrowing through these means on the increase year on year since 2011. An estimated 4.1 million people are in financial difficulty – having failed to pay bills in 3 or more of the previous 6 month period. It was also found that those people are most likely to be aged 25-34 years*2.

Other topics in the news have been how UK banks plan to clamp down on giving consumers credit. This reduction of the number of new credit cards and unsecured loans such as overdrafts is as a result of banks becoming more cautious – tightening lending criteria and approving fewer applications.

There are also rumours that the Bank of England may be raising interest rates in November, which may be causing unease amongst the public in regard to their financial stability. If interest rates are increasing, then those individuals who are on variable rate mortgages or coming out of a fixed rate may see their monthly repayments increase. This will result in reducing the amount of disposable income left at the end of the month.

So, if you find yourself with no money to spare, or constantly looking to payday loans to cover bills, or relying on your credit cards towards the end of the month to get you through to payday, this might be a sign that you’re struggling financially and need some help.

If you do, PayPlan is here to help with free debt advice. We have over 20 years and we have a well-established method of dealing with creditors, allowing us to act on your behalf. We aim to get creditors to agree to freeze interest rate charges and reduce month repayments based on what you as an individual can reasonably afford to pay.

Even if you just need some advice around managing finances and want to get some free, no obligation debt advice then give us a call on 0800 716 239 or visit www.payplan.com/

*1 Source: http://www.bbc.co.uk/news/business-41608881
*2 Source: http://www.bbc.co.uk/news/business-41655915