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The
young have the highest level of unsecured debt in the UK, with the average
consumer under 30 owing almost £8,000, a recent study has revealed.
Those aged between 18 and 29 owe about £7,718 each through credit cards,
overdrafts and loans, equivalent to 36% of their total household income, the
research by Alliance & Leicester reveals.
The figure is over twice the £3,740 the average person over 50 owes in
non-mortgage debt, and it is also higher than the average debt of £7,301 owed by
30 to 50 year olds.
But young people have the lowest levels of credit card debt among the three age
groups, owing an average of just £1,073 on their plastic, less than half the
£2,580 owed by people aged between 30 and 50, and below the average debt for the
over 50s of £1,556.
Half of young people have an overdraft, compared with 38% of people in their 30s
and 40s, with three out of 10 under 30s owing more than £1,000. They are twice
as likely as the over 30s to be permanently overdrawn, and three times more
likely to have exceeded their overdraft limit during the past six months.
But the research claims that, although the young have the highest overall levels
of unsecured debt, they owe nearly half of this through student loans, which are
relatively inexpensive to service. Consequently, the under 30s spend only 3.1%
of their income on interest repayments, the same proportion as people aged
between 30 and 50.
Chris Rhodes, Managing Director of Alliance & Leicester Retail Banking,
commented: "Our research confounds the stereotype that young people are
spendthrift and irresponsible with their finances.
"Student loans are their largest commitment and whilst the interest rates on
these are low, it still seems to constrain their appetite for other debt.
"The interest burden of this age group is not out of line with older groups.
Indeed, 30 to 50 year olds see their debt burden peak as unsecured debt combines
with mortgage borrowing."
Source:
Getting Paid
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