What is happening to the people of this country? It seems that scare stories about rising bankruptcies and Individual Voluntary Arrangements (IVAs) have had little effect in curbing spending.
A new report from Experian exposes some of the triggers that lead people to indulge themselves in retail overspend.
According to Experian’s research more than 80% of Britons admit to regularly overspending and millions are driven to consider last resort measures such as bankruptcy.
Financial mistakes, like taking out expensive consolidation loans with long payback periods and irrational ‘therapy spending’ caused by stress, arguments with partners or simply feeling low, are some of the main contributors to a large number of Britons regularly overspending. This highlights again the need for practical education and advice.
The research also reveals that:
- One in 20 (5%) have considered or taken out an IVA or declared themselves bankrupt
- Almost one in 10 (9%) have taken out a credit card to pay off debt on another credit card
- One in 10 (10%) have missed payments on credit cards, store cards, loan or mortgage repayments
- Confusion and lack of accountability lead to financial ‘moments of madness’
Almost a quarter (24%) of Brits admit to finding it hard to control their spending and claim financial matters are hard to understand, suggesting that the consequences of ‘moments of financial madness’ are not hitting home. With the CreditExpert research revealing that Britons continue to commit financial mistakes in huge numbers, from using one credit card to pay off another to taking out high interest consolidation loans, it seems consumers are getting more involved in credit with little understanding of how credit agreements work or the potential risks they are taking.
Mistakes such as missed payments on credit agreements can lead to unexpected charges and poor credit ratings, while ‘quick fix’ solutions like taking out an IVA will affect your credit report for at least six years.
Lack of understanding of the implications of overspending and financial mistakes is not the only reason for Britons’ lack of financial control. Emotional triggers and modern lifestyle pressures seem to be leading people to overspend and make rash financial judgements despite more than four in 10 (43%) of the population feeling that one should have control of all aspects of your finances, whether they be large or small:
- Over a quarter (26%) of the population overspend to cheer themselves up when they are feeling low
- Almost one in six (14%) overspend by treating themselves after a stressful day at work
- One in 20 (5%) overspend after an argument with their partner
- A quarter (25%) overspend by indulging in a passion or hobby
Experian is organising a Credit Awareness Week in conjunction with Credit Today magazine and other partners such as The British Bankers Association and the Consumer Credit Counseling Service.
The week aims to help the British public gain better control of their financial affairs. People wanting direct, easy-to-understand and manageable advice on getting their finances in check should visit www.creditawarenessweek.co.uk.
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