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Last Updated: Tuesday, 29 June, 2004, 14:12 GMT 15:12 UK
Debt creeps towards 1 trillion
A card being swiped at a checkout
Borrowers continued spending on plastic
The amount of money owed by consumers has edged closer to the symbolic 1 trillion mark, official figures show.

According to the Bank of England, money owed on cards, mortgages, loans and overdrafts rose by 10.2bn in May.

In total, consumers now owe 993bn, just short of the 1 trillion milestone, now expected next month.

The Bank of England has warned that the historically high level of UK household debt may pose "considerable challenges" to UK financial stability.

'Ambiguous' data

Spending on unsecured credit, such as credit cards and personal loans, accelerated during May, rising by 1.58bn, up from 1.29bn in April.

Lending to individuals

And the number of new mortgage approvals - loans agreed but not yet made - rose to 127,000 from 124,000 in April, the bank said.

However, mortgage lending grew at its slowest rate for nine months.

Secured lending rose by 8.6bn in May, down from a gain of 9.4bn in April, indicating recent interest rate rises might be having an effect.

Ross Walker of RBS Financial Markets said: "Underlying activity in the housing market still looks resilient but recent rate rises do seem to have (belatedly) had some effect in quelling consumers' appetite for borrowing."

The Bank of England has raised rates four times since November, taking the base rate to 4.50%.

The Monetary Policy Committee (MPC), the Bank of England's rate-setting body, meets next week to decide if rates will rise again.

James Carrick, an economist at ABN Amro, said the data was "ambiguous" and indicated mortgage borrowers would have a month's reprieve before the next rise.

"These numbers suggest there's less pressure on the Bank of England and perhaps they can wait until August," Mr Carrick said.

Your comments:

My strategy for coping with debt is simply not to have any. I made sure the mortgage I obtained last year was within my means and went for a long-term fixed rate option. I only use the credit card for emergencies and clear it as soon as possible. If I want something that I do not have the money for then I save up. I do not earn a high wage, I am just careful with what I have and live within my earnings. This appears to have become an old fashioned concept.
Donna Chisholm, Staffs, UK

No-one wants to live with debts, but the system encourages risk taking and disadvantages those that are sensible. The housing market is the prime example. Most people have to borrow far more than is sensible because there is always someone else prepared to borrow too much to outbid them. We need much tighter controls on lending, with borrowing pegged to salaries, for example. If mortgages were limited to three times annual salaries then house price inflation would imitate rising incomes not wildfires.
Richard, Newark, UK

People are just living on borrowed time. A good percentage of new mortgages are re-mortgages. It is a feel good factor. People think they have loads of cash as their house is valued at so much. They then borrow against it and run up even more debt. They don't look at it as debt as it is borrowed on the house. It will all end in tears in the new few years
Simon George, London

I am a student and as such have been in debt since my first year at university. I think that debt will be an integral part of my life for the foreseeable future. It becomes a way of life and doesn't even phase me anymore. The generation that only gets into debt for their mortgage as long since ended.
James Gray, Cardiff, Wales

My debt has not increased, nor has it decreased much either. I keep changing credit cards to keep the interest rate at 0%. I think that both the lenders and borrowers got themselves in a risky situation. The government should be more involved.
Moshe, London, UK

Being just out of university I have a large amount of debt built up, I am slowly paying it off, but the problem that I have is with all the money I spend trying to pay of the debt, I have little money left to save, buy a house, or even live a little. This means if an unsuspected bill comes from the dentist or optician I have no choice but to put them on the credit card and the vicious circle begins again.
Claire, Milton Keynes UK

I just bought a house and took a loan for a new motorbike safe in the knowledge that the repayments won't pass more than one third of my monthly income. I'll never understand people who are unable to manage the basic principles of debt management
Lee Byrnes, Edinburgh

My strategy for coping with debt is "if you cant afford it, you cant have it". It is greed, and society's growing need to have things instantly that's causing debt and borrowing to increase. Save your pennies then buy the goods, you will not only appreciate the thing you've saved up for, but you will not have a debt either. It is simple really.

I will never look at another credit card again
Dave, UK

My guide: 1) Don't panic. 2) Realise it is a problem and that problems have solutions. 3) Examine all income and outgoings over the last six months and be completely honest about this. 4) List all essential outgoings: water, gas, electricity, food, fuel, council tax, credit cards and so on. 5) List nonessential outgoings: mobile phone, satellite TV, internet, and so on. Determine which are really worth keeping or changing. Perhaps text instead of calling, or ITV sports instead of pay TV. 6) To the essential outgoings list add 10 per week for personal "pocket money" to be spent on anything, for example, beer, wine, or fags and so on. 7) Find something that occupies lots of time that is free. Mine was studying the history of the UK with free books from the local library. 8) Pay bills at the last moment, but don't forget them. 9) It is a struggle to change to this style of living so you are allowed to slip up occasionally. Don't penalise yourself for this. 10) Consider moving mortgage. I save 2,200 a year having done this.
Bob, South UK.

After coming close to not being crippled financially by my credit cards I have since learned to live within my means. Therefore I'm not worried about the levels of debt I have. If I can't afford something immediately then I wait and save up.
Richard Lewis, London, UK

Although perhaps a minor part of total borrowing, the UK credit card system makes it too easy for people to live beyond their means, using credit cards to "round-off" the month. In most European countries, credit card borrowing is restricted to one month's credit. Card users cannot choose to repay interest only but must pay back the total debt from the previous month. The UK makes up the near totality of European credit card debt.
Stuart, France

I have no doubt we are heading for trouble. Borrowing just feeds our current mind set of wanting things now and not really thinking of the consequences tomorrow. However, you reap what you sow and I think sadly there will be many tears in the not to distant future. Although I am all for people taking personal responsibility, I am amazed the government has, and is, being so slow in addressing this ever growing cloud over our country.
Lofty, London

Just who is taking on all this debt? I and my partner use credit cards but pay all the balance off at the end of the month. Maybe we are just old saddos but at least not old and in debtos.
Ben Briers, London, England

Credit cards should be renamed debt cards
Grant, UK

My strategy is simple really. If I really want something I save up for it. The fact that the UK is in debt to the tune of 993bn is a national disgrace, Well done Mr Blair you've created a nation of credit junkies.
A Cleator, Isle of Man

My 18 year old son was told by the bank that having a saving account for several years no longer helps for his credit rating - getting a credit card will. Another encouragement for the young to get into debt.
Ian Wood, Midlands, UK

I'm 21 years old have a mortgage and a 12,000 Loan. I think people should be better educated on how to handle there money, it's something everyone has to be responsible for but yet we are not taught about it. I learnt the hard way.
Sally, Brackley, Northamptonshire

I have debts of nearly 45,000 on seven credit cards built up over the last ten years. I have no chance of paying them off - I can't even afford the minimum repayments so am looking at bankruptcy very soon. When I get through it I will never look at another credit card again and will only spend the money I have.
Dave, UK

Mortgage debt is encouraged by financial institutions lending more than three times annual salary and by credit card companies allowing multiple cards per person. These institutions are not worried by bad debt because the consumers just pay more. The government needs to set an example but Gordon Brown has borrowed only 141 bn over the last five years with no means but to raise taxes to pay it back.
Brian, Preston

Keeping up with the Joneses. If you must buy something because your next door neighbour has one, then you really do deserve to be in huge debt - sad materialistic people.
Darren Smith, Weymouth

We recently went to buy a new car. Asked for the best cash price and we were told we should really borrow the money rather than pay cash, as Cash was no good to them and would therefore not attract a discount. Whatever happened to "Cash is King"? So there is no point in "saving up" as you end up paying a higher ticket price up front than someone else borrowing the money and with rates so slow the discount can offset the credit charge maybe?
John Needham, Dublin, Ireland

As a recent graduate, debt is a normal part of life and I do not see myself ever not being in debt unless I go bankrupt. I believe that the bankers and the government have conspired to create a debt-based society and that the situation will lead to a revolution against them when the people realise what is happening.

Please don't look down on people who are in debt
Joanna, Hove, UK

Credit cards should be renamed "debt cards".
Grant, UK

When I got into debt I contacted the Citizens Advice Bureau. They contacted all my debtors and arranged sensible repayments and even got the interest frozen to stop my debt increasing. I have been paying back my debts for the last five years and am now beginning to see light at the end of the tunnel.

Don't ignore your situation and hope it goes away or consolidate your debts into one loan with even more interest to pay, it won't solve anything. Make the positive step to clearing your debts with a sensible repayment plan and don't get any further into debt. I have and it's really improved my quality of life knowing my finances are under control.

Instead of being serfs for life to our feudal landlords, we are now slaves to the banks.
Yousef, London

Ever since university, I have spent the past five years paying off all my debts. It has been a long hard slog, and by Christmas I will have paid everything off. It has been a well learned lesson that, at the end of the day it's not your money your spending. It all has to be paid back eventually.
Zoe, UK, Worcestershire

Worried? Yes. Please can one of these debt wizards tell me how I'm supposed to live in London on a graduate wage unchanged in almost three years, where I must repay student and graduate Loans, pay for the mandatory private dentists treatment and opticians bills, not forgetting a pension. Oh and rent, transport, have a life and somehow 'Save' for the future? Let alone take out a Mortgage? Average London house prices almost ten times my yearly wage surely warrants immediate Government action.
Andrew Taylor, London

I've been in debt up to my eyeballs after some silly mistakes when younger, that being said I'm working my way out of it. I have an overdraft, a personal loan and a car on hire purchase, I don't however have any credit cards as I've paid them off and cut them up. The society we live in is all geared for today, and everywhere you turn there are adverts for loans or credit cards, is it any wonder we are in such a vast amount of debt?
James, Cambridge, UK

Who has all this debt? With employment at an all time high, most people should be able to see a regular income coming in. Now is the time to sort out the finances, rather that in a few months time when the pre-election boom ends and the job losses start. I have no debt other than the mortgage and this year will see me make significant capital repayments. Whatever everyone else is doing, do the opposite.
Paul, Farnham, UK

We ignore a subtle point here perhaps? All this debt is being used to fuel a consumer spending frenzy which is creating employment in the service sector. This means growth and full-employment. However, when the feel good factor ends and the spending slows, what then?
Simon, Bournemouth, Dorset, UK

I think it does nobody any good to get on their high horse about debt. The problem is once you have one debt, 99% of people borrow to pay that off and then so it goes on. We are all human and we all want things now. We are encouraged to get into debt and it is now unacceptable not to have a credit card in order to get a credit rating. Those people who have been sensible, well done, but please don't look down on people who are in debt. We didn't kill anyone. We were just trying to do the best we could with the tools we had. I am paying off my debts and am not blaming anyone for it or asking for any help. I am happy to go without certain luxuries so that I can sleep at night. I am not in a dire situation but at 40 have realised that all of my adult life I have had debt of some sort and don't want to enter my later years in this way.
Joanna, Hove United Kingdom

Is it any wonder that twenty-somethings think debt is a normal state of being when they start out adult life owing many thousands of pounds for their university education?
VM, London, UK

The key to this is inflation. Borrowers instinctively know that their debts are manageable because we have an inflation rate far higher than the official figures. If the government were to include house price and council tax inflation. the figures might even be in double figures. Any period of double digit inflation reduces the real burden of the debt. But pity the fixed income folk, like pensioner who are cannot rely on the wage rises enjoyed by the rest of us.
Philip Winter-Taylor, Ashford U.K.

If you find you never have enough money left to make payments 2 weeks after pay day. The best way to solve this is to make sure all essential payments are made by monthly direct debits, the day after pay day. This way you should be able to manage your outgoings on discretionary spend better. If you are light towards the end of the month, use the credit card but pay this of as soon as the next pay cheque comes in. Lastly make sure you and your partner are on the same wave length if you know you can't afford something tell them not to get it.
Mike Olivier, Reading, Berkshire

As far as I can see, most of the debt is from mortgages. Since we've been encouraged to buy property for the last 20-odd years, is this really surprising? More to the point, is it really a problem? Doesn't this sort of thing keep the wheels of commerce turning?
Neil, Bath

My wife sorted me out, made me stop spending and saw that I worked my way out of debt after uni. My lesson, marry the right woman.
Andy, Peterborough

As a result of spending four years at University and having to borrow to relocate from Leeds for a decent job "down south". I am now almost 19,000 in debt at only 22 Years old and its going to haunt me for most of my life. Is this the cost of a good start in life? Under new labour it is!
Danny Russell, Crawley, UK

The financial institutions need to take much of the responsibility for current levels of debt and the problems caused by debt. Their irresponsible attitude to lending, regardless of income often results in stress, mental illness and even suicide. The pattern is one of the lower an individual's income, the higher the interest charged. This together with penalty charges for being "over limit" or late payments (even one day) result in many people getting into bad debt. My advice is this - Try to live within your means, avoid store cards, high interest credit cards and doorstep money lenders. Don't ever take out a secured loan to repay unsecured debts and if you think you may not have enough money in the bank to pay your direct debits, cancel them before your bank hits you with excessive additional charges. If all else fails get help from a free money advice service or Citizens Advice Bureau
Dave the debt adviser, Bury

I think that spending and debt should be part of the school curriculum. In this day and age it's far too easy for young kids coming out of school, going into stores and buying their clothes, Hi-Fi etc on credit and storecards. If the government taught people in schools the dangers of getting into debt, then this would help to solve a lot of the problems arising. Debt is an evil that we can do without. Behaviour breeds behaviour, and if kids see their parents spending on cards and so on, the chances are they will eventually do the same because that's what they have been brought up with.
Norrie, Glasgow

We should all live for today and not tomorrow - that's what I say. I have credit card bills totalling 12,000 and I don't regret it at all. I am just about to get an equity release loan on my house and borrow another 20,000 for a new car, life is good.
Daniel, Surrey, UK

I used to work for a high street bank, and know at first hand at how easy it is for people to get credit. We had to upsell on loans and sell credits to people to hit our targets and were given prizes on days that we hit our value target. This is not to excuse people for some of the blame as they don't have to take up the offers but they do make it very easy
David, Gloucester

There are an awful lot of folk here whinging about their student debt. What makes you think I should be saddled with the cost of your education while you disappear into the sunset without contributing a bean? Grow up. The yanks have always had to pay their way through college. Know how they do it? Instead of getting sozzled down the uni bar everyday they get jobs. Paying for your education is in itself a good education for how the real world works; if you want something then fine, but be prepared to pay for it.
Max, UK

We have paid for our children to go through University - they know that when we die they will inherit less. They have no debts when they start out their adult life as it should be. If we had fewer illegal wars, more sensible taxation and more immigrants to sustain a sensible population pyramid then all young adults could start out the same way. Let's have more tax, especially on those earning over 100,000 a year.
Jack, Essex

I believe store cards also play a part in this. I work in a Store and have to offer these to customers, I hate doing it and annoy my managers when I don't try hard enough, but to me they are evil, I can tell when a customer has no idea what they are and you know they will have problems. I seem to be the only person that can see this at work. I've seen many customers with Wallets the size of a DVD case stuffed full of credit cards and store cards. They'll be crying when they realise 5-15% discount is not a lot at all. All I can say is avoid them like the plague. The discounts are just not worth it. Shop somewhere cheaper if you really need to save money.
John, Berks, UK

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