At some point in the last ten years, since the financial crisis (for that life-changing decade is an anniversary we are approaching), a change in perspective occurred: we went from seeing unsecured debt as something that is undesirable but occasionally necessary to something that is both unavoidable and normal.
Credit cards and loans, once something for emergencies, are now a vital way to get through the month until payday for millions of people. Research from GoCompare found that 22 per cent of the British public relies on credit cards to live.
The average consumer credit debt was £7,349 in April this year – £543.70 extra per household on a year before, according to the Money Charity. That’s a steep rise of almost ten per cent in 12 months – during a period that coincides with rising, Brexit-induced inflation.
Who are these people, dependent on handouts from credit card and loan companies to get by? It might surprise you.
According to GoCompare, the people so in the red that they have to take out more credit to avoid problems are people who you think really shouldn’t need it: it found that 30 per cent of people using cards to survive earn between £50,000 and £70,000, compared with 25 per cent of people who earn £15,000 (you may question the use of the word ‘survive’ – I think it means ‘to pay the bills’ rather than actually stay alive). The website found that the higher income bracket made up the biggest proportion of desperate borrowers and speculated that debt could now be a ‘keeping up with the Joneses’-led phenomenon.
It might not be just down to the simple urge to compete with one’s neighbour for material possessions. People who earn more are better credit bets, in the eyes of the providers, who want some certainty that their customers will be able to meet repayments.