April 21, 2006

By Peter Kenny

A recent survey by the Alliance & Leicester group has found people aged between 18 and 29 owed on average just under £8000. This borrowing is made up of, overdrafts and personal loans.

When looking at the survey results closely it is found that young people actually have the lowest credit card debt in any age group. Credit card debt for 18 to 29 year olds averaged out at just £1073 per person compared to £2580 for 30 to 50 year olds.

It was also found that less in one in ten of 18 to 29 year olds owed more than £5000 on their. This figure compares favourably to the 30 to 50 year old age group where over 18 per cent owed more than £5000 on their.

Other figures worth mentioning are the £7718 figure 18 to 29 year olds owe is the equivalent of 36 per cent of their total household income. At the same time the 30 to 50 year old age group owe on average £7301 which amounts to 23 per cent of their household income.

Although the 18 to 29 year old age groups average debt is higher, the bulk of it is actually made up of student loans, which is significantly cheaper to service and pay back. This amounts to just under 3% on all repayments being used to repay interest. At the same time the interest allocation for the 30 to 50 age group amounts to 30 – 50 per cent.

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

"The interest burden of this age group is not out of line with older groups. Indeed, 30 to 50 year olds see their debt burden peak as unsecured debt combines with mortgage borrowing."