by News Team on May 23rd, 2013
Too many households in the UK are being forced to use credit cards and overdrafts to get them through to payday.
Research by MoneySupermarket.com has discovered the current generation is becoming overly reliant on borrowing to balance their finances – a situation that could lead to heartache in the long run.
Indeed, the study discovered consumers are saddling themselves with additional debt as they do not fully understand how interest rates are calculated.
Worryingly, 39 per cent of respondents have used their savings to get by, while 41 per cent have been forced to rely on an authorised overdraft to tide them over and 27 per cent turned to plastic.
Kevin Mountford, head of banking at MoneySupermarket.com, said one of the main reasons that people are struggling is because of the rise in the cost of living.
"For those relying on credit cards or their overdraft as a fall back until pay day, as our findings show, it really does pay to research your options and think about the additional interest you could end up forking out," he added.
Mr Mountford pointed out that credit cards can boost credit profiles and help people manage their day-to-day expenditure, but if individuals do not pay off the balance in full at the end of every month, they could get caught up in a debt spiral.
People are also demonstrating an increasing willingness to lean on their friends and family in their hour of financial need. Some 27 per cent of those questioned had borrowed money from this source, with those aged between 18 and 34 the most likely to do so.
Individuals going down this route need to be careful though, as this could create some discontent if previously agreed upon repayment plans are not kept.
Mr Mountford concluded by reminding consumers of the golden rule of borrowing – to make sure "you can pay it back and that any debt incurred doesn't spiral out of control".
By James FrancisBy News Team and is filed under Personal Debt.
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