Tuesday 10th of November 2009
Thousands of British families could be considering a debt management plan after learning that the average household will have to use 15 per cent of its income just to meet interest repayments, according to PricewaterhouseCoopers.
In Britain, the average home owes around £60,000 - of which £50,000 is on a mortgage and £10,000 on unsecured loans such as credit cards.
And that could mean an average indebted consumer will be forced to fork out several thousands pounds in the next 12 months just to pay off interest on their borrowings, without even beginning to reduce overall debt.
A debt management plan could reduce interest rates on debt and restructure repayments so that they are more affordable to a borrower.
Richard Thompson of PricewaterhouseCoopers predicts credit chaos could change the industry.
He said: "Large scale change within the sector over the next few years is inevitable. We’re likely to see credit cards being reinvented as payment rather than borrowing tools."
But that may be of little use to those currently drowning in debt, especially as it was recently reported that credit card interest rates are continuing to rise despite the all-time low base rate.
By Kimberley Parsons
