Welsh consumers face debt crisis

The report claims the most popular type of credit is mail order

One in five people in Wales have fallen into arrears with their credit card repayments or household bills, according to a new report.

The Department of Trade and Industry and the Welsh Consumer Council warn that consumer borrowing has rocketed to a level that is or could soon become unsustainable.

They are calling for more financial education for teenagers in schools and better support for citizens advice bureaux to try and avoid the problem.

Claire Whyley, Head of Research and Policy at the Welsh Consumer Council, said serious debt problems in the post-Christmas period would be "a harsh reality for many consumers."

"While many households in Wales are managing their credit commitments without problems, a debt crisis in Britain would have more serious consequences in Wales," he said.

The report gives us a much clearer picture of the level, nature and extent of borrowing and debt among Welsh households Edwina Hart, AM

"It would affect more households and would, undoubtedly, be harder to recover from."

The survey provides the first-ever statistically representative figures on the level and nature of credit use and indebtedness among households in Wales.

It shows that 10% of people in Wales admit that they have borrowed more than they can afford to pay back.

Eight in 10 Welsh households have credit facilities - a higher proportion than the rest of Britain.

It also reveals that poorer households, and those headed by lone parents, tend to be heavier borrowers.

The report states that the most popular type of credit is mail order and is used by one in four households.

This is followed by personal loans and credit cards.

Edwina Hart AM, Welsh Assembly Government Minister for Social Justice and Regeneration, described the report as an important contribution to the widespread concern about a possible debt crisis.

She added: "I am particularly pleased that the report gives us a much clearer picture of the level, nature and extent of borrowing and debt among Welsh households.

"Such information is vital in terms of our understanding of the issues and in guiding the work of the Assembly Government in its wider financial and social inclusion objectives."