Many consumers may be committing 'financial suicide' : Credit Card Guide

Many consumers may be committing 'financial suicide'

According to a recent report many consumers across the UK may be committing financial suicide by believing that getting into high levels of debt is ok because they can bail out using either the equity from their property or through insolvency.

According to a report from the Personal Finance Research Centre, younger people are becoming reliant on borrowing to fund their day to day spending, often failing to distinguish between actually needing something and simply wanting something.

A number of young adults thought that debt consolidation or insolvency were the solutions to sorting out their debts according to the report from the PFRC. The report also showed that consumers across all age groups looked upon rising house prices and increased equity levels as a solution to dealing with their debts. According to officials consumers have become so reliant on these 'solutions' that they do not bother to look at any other alternative, instead relying on credit to fund everyday life.

The research was commission by Standard Life, and an official from Standard Life said that there had been a dramatic change in consumer attitudes towards debt over recent years.

One official stated: "Credit is not only freely available but considered a way of financing lifestyles rather than reflecting need. A seismic change in mindset is required to begin to unwind the chronic debt issues we face in the UK. Pinning your hopes on housing equity or thinking that insolvency is the easy way out of debt is financial suicide."

An official from the Consumer Credit Counselling Service was also concerned at the level of people that saw their homes as what he described as a 'get out of jail card'.

He even went as far as to say that many people that owned a home were at even greater risk of debt problems, stating: "It's time to put an end to the old shibboleth that buying a house is always good for you. A large proportion of the people who turn to us for help are those who have taken out mortgages which they cannot afford, leaving them highly vulnerable to interest rate volatility."

Tom Smith

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