Generation debt myth debunked

Contrary to popular perception, people in their 20s are actually among some of the most responsible users of credit and debt in the country, new research has revealed.

Despite widespread media reports of a feckless “generation debt” 20-somethings spend the same proportion of their incomes servicing debt as those in their 30s and 40s.

“Our research confounds the stereotype that young people are spendthrift and irresponsible with their finances,” said Chris Rhodes, managing director of Alliance & Leicester.

The research did confirm that young people are the most indebted generation in the UK, but points out that much of their debt burden consists of low-interest student loans.

People in their 20s have an average £7,718 in non-mortgage debt, £417 more than the average 30-50-year-old and twice the amount owed by the average 50 or over household.

Despite the higher amounts and average lower incomes, debt servicing among the under-30s amounts to 3.1 per cent of income, exactly the same as those paying for best rate credit in their 30s and 40s.

“Student loans are [the under 30s] largest commitment and whilst the interest on these are low, it still seems to constrain their appetite for other debt,” Mr Rhodes added.

© Adfero Ltd

Leave a Reply

Your email address will not be published. Required fields are marked *