Many Cardiff residents are still facing a daily struggle with debt despite the UK’s gradual economic recovery and a fall in the number of people seeking advice, a leading debt charity has warned.
Figures released today by StepChange Debt Charity show that 1463 people in the Cardiff area called its helpline for advice in the first half of 2015 with average debts of £10,804. This left them with a budget deficit every month, meaning they were £7 short of being able to afford even their essential bills.
The figures coincide with StepChange Debt Charity’s new report, Navigating the New Normal, which shows that more than 1 in 5 Britons are currently showing at least one sign of financial difficulty and 2.6m of them are in severe problem debt. Of those 2.6m, 73% suffered at least one ‘income shock’ in the last year, such as job loss or a reduction in hours.
The charity says that people on low and middle incomes are particularly at risk after an income shock, with a combination of little to no savings and an unresponsive welfare system leaving them unable to meet their basic costs. Shocks to their income often see them turn to credit to cope, which makes them 20 times more likely to fall into problem debt.
The report comes after the latest Bank of England figures showed the highest annual increase in borrowing on credit cards and personal loans for nine years, sparking fears of a return towards the high levels of unmanageable credit seen in the lead-up to the financial crisis.
Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“Everyone faces ups and downs in life, but more than 11m people in Britain are now experiencing some financial difficulty and a quarter of those are in severe problem debt. Cardiff is no exception and although the economy is beginning to recover, millions of households remain vulnerable to shocks to their income over the next year and many could find they have no alternative but to turn to credit to cope, which can quickly make the problem much worse.
“Debt can have a devastating effect on people’s lives, including sleepless nights, anxiety and mental and physical health problems with knock-on effects for their families. We would urge anyone who is experiencing debt problems to call us for free, impartial debt advice and take that first step as early as they possibly can.”
