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Last Updated: Wednesday, 27 August, 2003, 09:37 GMT 10:37 UK
Credit card culture takes hold
Pound coins
Debts of up to 40,000 are commonplace

Nearly one in four people admits to regularly using loans or credit cards to pay their household bills and meet other day-to-day expenses, according to a new survey.

Many Britons are dipping into the red to pay bills and even to buy food, as well as buying sizeable one-off items which are the more usual reason to take out loans.

In fact, just over half the people questioned by accountancy firm KPMG admitted that they owed up to 10,000, excluding mortgage borrowing.

Out of the 2,000 adults surveyed, 16% said that they had substantial debts of between 10,000 and 40,000.

And 15% of people said their debts were spiralling out of control.


Nearly one in six people said that their escalating debts worried them so much that they could not get a good night's sleep.

Current debt trends seem unsustainable in the long-term and people need to take action now
Carolyn Steppler KPMG adviser

Nearly half those questioned preferred to bury their heads in the sand over their debt, with 45% admitting that they failed to regularly read their bank and credit card statements.

And more than a third of people said they either had no idea or only a rough idea how much interest they were paying on their debt.

However, Britons are keen to be free of their debt burden.

84% of those surveyed said they hoped to pay off their debts within five years, with 22% saying they would work overtime, or try to get a new job or a promotion to pay them off.

But 7% planned to take the drastic step of selling their home or remortgage it to clear their other borrowings.

"Current debt trends seem unsustainable in the long-term and people need to take action now," Carolyn Steppler KPMG adviser said.

Your comments

I have never taken out a loan for day-to-day expenses. It would be madness to do so. If your expenses are greater than income you have a problem that needs sorting, so you have three options:- 1) reduce your expenses 2) increase your income 3) Do both 1 and 2. Taking out a loan is doing the exact opposite of 1 by increasing your expenses further. Dangerous.
Phil, England

I don't have a credit card and I don't use my overdraft limit as both are expensive. Managing your money is simple: You can only spend the amount of money that is coming in. If I want to know how much I have left until payday, I go to a cash machine or on the internet. It's so simple now to monitor closely your account level. At the end of the month I tend to not spend anything at all anymore until payday. It makes me aware every time of how little you can live off if you allow yourself to buy only the very basic items.
Svenja, UK

I pay for just about everything on plastic. I have several cards - The one that I use for regular spending is cleared in full every month by Direct debit on payday. I instantly know how much I've got left for other bills during the month. I never pay interest but do get cash back on that card. Then there's the balance from building an extension. This has been moved from card to card to take advantage of introductory offers. I've been steadily paying that off for a couple of years now - I have around 3,000 left to clear.
Caroline Brown, UK

At the age of 19, I had over 21,000 of debt. I am now 25 and have just finished paying off the last bit of it. To be completely clear of debt is an incredible feeling of freedom for someone who has been struggling with debt for years. The real danger is falling back into the trap of thinking that suddenly you have disposable cash again. I have cut up all my cards and intend not to use them again. I just hope I manage it.
Neil Roberts, England

This is pitiful. In it's simplest term there is absolutely no point in spending, say, 15 when you've only got a tenner in your pocket. The 'must have now' culture people live with has got to stop. Years ago people used to save up for things they wanted - it's all down to self discipline. It is not rocket science.
Steve , UK

Why can't people learn to live within their means? Some might blame high property prices, but rental prices are dropping, so jump on the bandwagon and wait a few years. It is also notable that most millionaires are not people, who have won the lottery or who own multinational companies, but people living well below their means. The most fearful thing is what might happen if the public suddenly decides they cannot pile on any more debts and suddenly stops spending and pulls out all the stops to clear their debts; we could be in for a meltdown.
Graeme Phillips, Germany, normally UK

People are left little choice these days with the general cost of living spiralling out of control. We are forced into paying more and more for services for which we have no control. It is not carelessness but necessity that is causing many like me to get deeper and deep into debt. I cannot see any short-term improvement or solution to this and have totally lost faith in any government regaining control. I am even considering leaving this country for a better life elsewhere. Just leave Britain for the immigrants and politicians!
Stuart Boyle, Debt Ridden UK

Whilst many people clearly do have debt problems, the "figures" for how people use and abuse credit cards need to be kept in perspective. I put almost all my spending on credit cards, for convenience, and as I get 1% rebate, but it is paid off every month, and I never pay interest. So, I do not have a "debt" problem, but with an average of 2000+ "outstanding" at any time (allowing for overlap between months), am I counted amongst the statistics for "debt problems"?
Dave Harvey, UK

I have no debts, no credit cards and never use an overdraft facility. The only borrowing I have ever undertaken is for a mortgage long since repaid in full. Even when I was at university full-time as a mature student with a mortgage and rates to pay I never considered a loan. Instead I had a variety of employers and worked my way through my degree. Debt is closely associated with greed. It is the 'I must have what I want and I must have it NOW' attitude so prevalent today. What is more worrying is the large volume of mail I (and no doubt others)receive inviting me to take out a loan. Needless to say such invites are wasted on me, they are shredded and then hit the bin. Remember, there are no poor money lenders. Gillian, England
Gillian Holt, England

This situation is a consequence of the credit driven society we live in, even when buying things for the home business's offer customers credit and try and sell them the service. Increasingly people are falling for the creative way money is loaned unaware of the huge rates they will have to repay. As for students being in debt is a fact of life, since the abolishment of grants. they finish university with 15k worth of debt if they are lucky, today borrowing is not seen as a bad thing. what people don't realise that it is spiralling out of control.
Imran, UK

Banks and credit card companies prosper because most people want the reward before the effort. I gave my credit cards back to HSBC a few years ago and the only time i missed them was when i tried to hire a car in the UK from Hertz by paying cash. I was photographed and almost treated like a criminal to have the gall to offer cash. Mind you in their favour they were the only car hire company at Heathrow willing to accept cash. Please pay your debt and live free where life is wonderful Scrap the plastic
Jerry Dean, Thailand

The fact is the government and the entire banking industry know the debt in the UK is out of control, they all fostered the creation of a massive debt, the core debt being based on illusionary values of British assets, property, stocks and shares and so on. Real wages cannot sustain the property and share fiction, so more money is pumped in through credit cards and loans. Britain is heading for an almighty crash. Best solution for those in large scale debt is to declare themselves bankrupt, like the country as a whole.
Marcus , UK

There's nothing wrong with having a credit card. I have three. I've never been into overdraft and I have not developed debt problems. It's a matter of not spending money you don't have, and paying the bills the day they land on the doormat.
Jane, UK

Debt is required for the economy to continue expanding. Why did people in the 50's, 60's live in relative poverty compared to today? They saved and saved before buying, so there was never any money circulating to stimulate growth. How much in debt you wish to be is a personal choice, but I do not fear it. It is a necessary 'evil'.
Sean, UK

I'm 26 yrs old and have deliberately never had a credit card in order to stay out of debt. This year I applied to get a loan to buy a car and I was refused by most of the loan companies because I had not had a credit card or loan before which meant that I had no credit rating at all. I was advised to get a credit card or store card and re-apply in 3 months so I've now had to get two credit cards on the go to build up my credit rating again. A system that penalises you for being sensible with your money is ridiculous.
Anon, UK

It's no wonder most please feel ashamed and try to hide their debt when sanctimonious comments like the majority of those expressed here. The reality is that in today's society debt whether in the form of a mortgage, credit card bills or loans, debt is a way of life for many. As long as people can make the re-payments what is the problem? To suggest this is something new is to be mistaken. Historical references show people have borrowed significant amounts of money for thousands of years without credit cards, remortgages or other modern inventions. The only difference is that in modern times you can't be sold into slavery to pay your debts!
Richard, UK

I personally feel that ones debt is something that depends on your age, circumstances and how you were brought up. Happily I now consider myself a wily consumer and managing my money is my second (more enjoyable!) job. It's worth noting that getting sixty quid debited to your account from a credit card company is much more satisfying than paying several hundred pounds in interest, I can tell you!
Chris Reynolds, UK

It is the ignorance of people about money, greed of banks and pressure from the consumerist media that has got us into this state. The final blame has to be on the individuals that have spent beyond their means just so they could have the latest fashions and gadgets. When I was a student and was earning very little, I always thought it was absurd that I had a total credit limit on 2 credit cards totalling more than twice what I earned in a year. Many might have treated this as 'free' money. I have always treated my cards in the same way as cash and cheques. Call me boring, perhaps, but at least I can sleep at night!
Nick, UK

I never take out loans as I have taken early retirement and never intend working again. Low interest rates are to blame to for the credit boom, house prices beyond the reach of first time buyers and lack of incentive for anyone to save towards retirement (as interest rates on savings are still minimal for those lucky enough not to invest in stock market based savings schemes).
David, UK

Like many people, I have money sat in a building society account earning very little interest, while rates are so low. I pay off all debt instantly - after all, repaying loans is effectively 'tax free' whereas (after a small allowance for a cash ISA each year) the interest I earn each year is taxed. We are supposedly being encouraged to save money for old age or infirmity, but paying off loans has to be the starting-point. It's almost impossible to live without a credit card nowadays, because all the best bargains require that you use the Internet... but it's smart to operate the credit card with a positive balance.
Richard, UK

I left university with 15,000 of debt and felt that this was a manageable and acceptable debt burden as the government effectively approved it. And when you're 15k in debt what's an extra couple of thousand? This is how the debt crisis spirals out of control for many young people I'm sure. All debt is bad and by validating graduates' unmanageable debt we are producing a culture of debt that is only going to create long-term problems.
Tamara, UK

Life (and finances) change so much once you have children. Until then, a lot of the rules that your other contributors have spelt out are true. e.g. only spend what you've got in your pocket etc. However, once you have a family, that can go clean out the window. Despite planning and saving, a time may come when everything goes wrong at once. An expensive car bill, broken washing machine or another household disaster can suddenly make a mockery of your budget. As a young family you're probably living close to the edge anyway so the use of credit is hard to avoid. You can hardly tell a two year old that it's baked beans for the next two weeks. The pressures on young parents can be substantial anyway and financial stress doesn't help. I know, I've been there.
Graham Sewell, England

Life is unfortunately expensive and in order to live life to the fullest we sometimes need to borrow. I never say no to a night out and never turn down joining a friend on holiday for the sake of a few hundred pounds. I use credit as a means to facilitate a happy life, full of activity, good food, sunshine and laughter. The vast majority of us will never have enough money to never worry about it so be realistic. Some of the most boring people I have met are those that can't go out until next pay day. Carpe Diem....and if that means borrowing a few quid....then what's wrong with that!
Paul, UK

The discussion so far seems to have identified two very different groups, one composed of holier than thou and financially prudent people and the other so those who can't see what the problem is, debt is an unavoidable and in many ways useful feature of modern life. What surprises me is that nobody has really focussed on the financial woe of debt. Put simply one can have an item now for 100 pounds or you can have it now for 110 pounds or you can wait and have it for 100 pounds later. Another factor not addressed is that of price inflation caused by the proliferation of credit cards as a means of payment. If retail outlets offered a discount for cash, which they ought to do as they are saying no commission to the credit card company, then it would be more obvious what effect the use of credit cards is having on prices.
Ian, China

I have to completely agree with Paul, UK as i use credit on a daily basis, but do not hold any major regrets as I live life to the fullest, it's all well saving large amounts of money but if you won't ever spend it then what is the point. And by the way I am able to repay my 100 000 mortgage on a 26,000 salary and to gradually repay any loans taken.
John, Ireland

I have battled with debt for 10 years since being left with two children aged 6 and 4 to bring up, with little financial support from their father. Whilst I have studied (whilst working full time) to more than triple my earnings over the last 5 years I still have to pay a mortgage, run a car, and deal with the financial consequences of the washing machine, boiler, and many other household appliances breaking down and needing replacement, for which I have never managed to get into a position where I can have a contingency budget. I take very few holidays but have generally tried to take the approach that life is for living - if I am to wait until I am solvent to provide the children with a childhood they will have left home! I will get there - but slowly - and am managing to reverse the situation as I now have a well paid job (exhausting - but that's another story!) Having said that, the unexpected is always around the corner and somehow it costs money! But you can't take it with you...and if I died tomorrow, bizarrely I would actually be solvent as everything would be paid off!
Helen , England

Saftey in numbers, with so many people in debt I think we may have the last laugh. In 10 years when half of the country is in debt I can imagine the government forcing banks to cancel the bulk of it. If they did it for Africa they can do it for us. After all this is a socialist governemnt and debt people are poor people by definition.
Jack, UK

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