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Nearly 70% of Brits weighed down by debt as interest rates ‘set to rise further’

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More than five million adults in the UK say they "haven't got a clue" how much debt they owe. Meanwhile, 11% of Britons over age 55 say they're still paying off a mortgage as they head closer to retirement.

A new study from Aviva also found that of the 2,009 people it surveyed in April, two thirds (67%) of Brits admit to having debt that’s weighing them down with 15% feeling their debt was ‘out of control’ and that they had no way of paying it off.

The most common form of debt (cited by 32% of respondents) is credit or store card debt. Coming in second is money owed on personal loans (16%) and overdrafts (15%). One-tenth said they had unpaid household or utility bills.

People heading toward retirement also feel concern about what they still owe, with 11% of the respondents over age 55 said they still juggled mortgage debt, casting a likely shadow over financial security in their later years.

The issue goes beyond the Aviva survey. Two million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in April. There was a 15% annual rise in the number of people approaching the charity Stepchange in March for advice on debts.

Planning ahead

Alistair McQueen, head of savings and retirement at Aviva, said: “Interest rates have risen to levels we haven’t seen since 2008 – and are expected to rise further. The cost of debt is now centre stage, and millions may be having to rethink their retirement plans.”

He advised that people start to “plan further ahead as early as possible is a small step that can make a big difference in the long term. Individuals can take some positive actions to reduce their debt before entering retirement, such as consolidating their debt, paying off high-interest loans or switching to a cheaper rate, alongside reducing unnecessary expenses or taking out a debt management plan.”

According to Aviva, 52% of 45-54-year-olds said this year that their debt had increased. That is more than twice the percentage found in a survey in 2021.

In all age groups and genders, about 20% of people surveyed said they expected to owe some or significant debt after they retire.

The survey did find that people were trying to address the issue, with 38% saying they had reduced spending on non-essentials like holidays and luxury items. Getting a second job or working overtime was helping 21%, a figure that was only 11% two years ago. Just 13% said they had sought advice from debt services or helplines.

Unexpected bills

It’s not always planned expenses that push people into debt. Aviva found that in the past 12 months, 31% of Brits had faced a surprise but necessary bill of £850 or more.

More than half of UK adults (57%) say they have emergency savings to pay for upkeep, repairs, or family milestone celebrations and only a quarter (24%) of them used the savings to cover for an unexpected bill, turning instead to a credit card (19%), borrowing from a friend or relative (11%) or taking out a loan or slipping into their overdraft. A further 5% said they cashed in a pension.

Where to get help

For people struggling to wrestle with debt, the Government’s Money Helper website can direct them to free debt advice services. And the Debt Respite Scheme (Breathing Space) was set up in 2021 to create legal protections from creditors.

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