Member Article

Consumers becoming ‘increasingly financially savvy’

Consumers in the region are becoming more financially savvy, shunning high-cost credit in favour of more conventional methods of finance, according to new research.

Insolvency trade body R3 found that almost 40% of North East consumers would turn to the bank if they needed money, while a further 22% would ask parents and family members.

By contrast, a mere 2% of individuals from across the whole of the North would make a credit card or payday loan their first choice for accessing money.

15% of those questioned said they have savings so don’t need to borrow, while a further 16% said they had never borrowed money and never would.

Steve Ross, chair of R3 in the north east and a director in the Corporate Recovery department of the Sunderland office of accountancy firm RSM Tenon, said: “It is good to see that people who need to borrow are doing the right thing in sourcing more sensible forms of credit, rather than looking for costly short-term solutions and therefore becoming more likely to have further debt problems.

“We very much hope that these findings indicate that consumers are becoming more aware of the dangers of high-interest credit sources and are thinking more carefully about how and indeed whether they’re borrowing money in general.”

The survey also indicated that people in the North began to worry when their debt levels topped £3,340, excluding student loans and mortgages. This is slightly higher than the UK average of £3,079.

Ross continued: “£3,340 is still a significant amount to owe, especially at a time when unemployment is still increasing - any amount of debt when you are not earning could be disastrous for your personal finances, and it’s important to keep a close watch on them no matter whether the money you owe is a concern to you or not.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .