UK family debt rockets

The typical debt owed by a UK family has soared by 48% since January 2011, as rising inflation has taken its toll on household incomes, according to the latest Aviva Family Finances report.The insurer said average unsecured debt had risen to an average of 32% of household income in January 2012, reaching £7,944, as families piled on debts rather than clearing them.

This was a 48% rise on the £5,360 figure the firm recorded in January last year, with Aviva also citing a drop in the number of families saving their money despite a 7% average rise in household income levels.

Meanwhile, over 60% of families polled by Aviva said their primary concerns in the next six months was the rising costs of living, while 46% were also worried about the threat of redundancy.

Louise Colley, head of protection sales and marketing at Aviva, said: “While average incomes have increased over the past year, the prices of essential goods and services have also increased, meaning that families are struggling to keep up.

“Many appear to have acclimatised to this economic environment by shopping around and seeking to minimise their spending in certain areas. However, at the same time there are still a worrying number of families with insufficient savings or large debts.”

Debt remains a problem for many even into old age, according to separate research by Prudential. It shows that 18% of people planning to retire this year will do so with outstanding debts, owing an average of £38,200, up £500 on 2011′s figure of £33,100.

Source:  http://www.guardian.co.uk