British families are spending almost a quarter of their disposable income purely on the interest accumulated on existing debt, research has revealed.
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The research, carried out by the Consumer Credit Counselling Service, found that debt interest in the final quarter of last year reached an average of £200 per month.
This is almost a quarter of the average disposable income for UK families, as living costs continue to put a financial burden on many households.
This was the finding of the Consumer Credit Counselling Serviceís (CCCS) Consumer Debt and Money Report.
It was found that the amount of income spent on debt interest went up by 0.01% in the last three months of 2011, compared to the previous quarter.
ìInterest payments are a heavy burden on household finances. With payment necessary regardless of economic circumstances, they pose a major threat to the solvency of many families,î the CCCS report said.
ìAs a major spending component that must be met on time, the need to service debt is posing a significant challenge in the current economic downturn when household heads lose their jobs and income sources dry up.î
The report also found that an increasing amount of people are seeking debt advice to help them deal with their financial concerns, with the steepest rise in demand coming for those aged 45 to 69.
ìThere has been a gradual rise in counselling demand from this group, with its share rising from 22.8% in 2005 to 31.7% by the end of 2011,î the report said.
The struggle for families has been put down to high inflation, the rising cost of utilities and other essentials, and a deteriorating jobs market.
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