Many people turn to loan sharks because half of us are in debt

Nearly half of Britons are in debt, and 15% of them turn to illegal lenders, according to a new study.

The study, of the main savings site VoucherCodes.co.uk , found that 48% of respondents say they have at least one type of debt (excluding mortgages), with credit card spending (78%) and overdraft payments (44%) being the main reason they owe money.

Main reasons for being in debt:

Rank

Cause of debt

Percentage of people currently in debt

1.

Credit card debt

78%

2.

Using an overdraft

44%

3.

Take out a personal loan

42%

4.

Using the “buy now, pay later” formulas

42%

5.

Borrow from a friend or family member

33%

Edinburgh residents are the most likely to be in debt (55%), with more than half of Derby and Cardiff residents also admitting owing money (both 53%).

UK cities with the highest proportion of people currently in debt:

Rank

City

Percentage of people currently in debt

1.

Edinburgh

55%

2.

Derby and Cardiff

53%

3.

London

52%

4.

Norwich and Belfast

50%

5.

Leeds and Manchester

50%

15% of all respondents who owe money say they are in debt to loan sharks – they owe £ 744 on average.

There are also marked generational differences, with millennials taking the loan shark route for extra cash more than any other generation (23%). They are also heavy users of payday loans and “buy now, pay later” programs, both of which are used by more than half of 25-34 year olds in debt (52%).

When asked how much money it takes to be ‘in debt’, Millennials say they wouldn’t classify themselves as such until they owed £ 5,773. This is 36% higher than the amount people aged 55 and over would consider the debt threshold (£ 4,246).

But, when it comes to trying to get out of financial difficulties, Gen Zs (18-24) are much less likely to cut back on experiences such as vacations (32%) than those 55 and over (63% ). Instead, more than two in five of 18-24 year olds would prefer to look to their parents to overcome their financial difficulties (42%). However, for nearly one in 10 Gen Zers, they see debt as nothing more than ‘inevitability’ and nothing to worry about (9%) .

Anita Naik, Lifestyle Editor at VoucherCodes.co.uk , commented: “Although it is sometimes difficult to avoid getting into debt, it is worrying that such a high proportion of people have turned to illegal money lenders as a means of obtaining financing. . This is something that should be avoided at all costs – there are other steps that can be taken to help reduce debt instead.

“For example, while some may be hesitant to forgo vacations or even lower recurring costs like subscriptions to streaming services like Netflix or Spotify, cutting back can really help save money. Our research shows this to be the most popular solution, with half of respondents saying they would miss Netflix or go on vacation in order to reduce their debt.

“Spending is inevitable, of course, but to do it within your means, it’s worth considering simple steps such as using discount codes to take advantage of the savings you get when you shop.”

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