Outstanding balances from unsecured lending in the UK reached its highest level in more than two years in January 2014, according to the latest figures.
The debt statistics from The Money Charity showed a sharp rise in the amount owed on unsecured loans, including credit cards, bank account overdrafts, personal and payday loans.
The charity revealed that for the past three years outstanding balances had declined in the month of January but this year the total balance soared to over £160bn for the first time since January 2012.
Michelle Highman, chief executive of The Money Charity, attributed the increase in outstanding balances on unsecured loans to “mounting financial pressures”, such as high indebtedness, rising food and transport costs.
Average household debt, excluding mortgages, was £6,087 in January this year, up from £5,990 in December, while £162m of interest was paid every day on personal debt in January.
Highman said: “We know that escalating debt and living costs constrain consumer spending and often force people to prioritise their debt.
“This usually means focusing on arrears where the consequences of not paying them can be incredibly serious, such as mortgages, child maintenance payments, TV licence.”
She added: “Consumers may be finding that once they have paid their priority debts and covered basic living costs they don’t have the additional funds to pay their unsecured loans. And as a result continue to incur high monthly interest.”
The value of outstanding personal debt at the end of January had climbed to £1.4 trillion, according to The Money Charity.
Hear more on this in the Debt Advice Conference at this year’s Credit Summit, taking place at the QEII Conference Centre in London on 3 April. For more details, click here.