Almost one in five (19%) adults in the region has had outstanding debt on their credit cards for at least six months.
New research by insolvency and restructuring trade body R3 and ComRes has found that credit card debt is most likely to be the cause of debt worry among adults in the North East and Yorkshire, Humberside who are worried about their current level of debt (56%).
The research found that 36% of adults in these regions are worried about their current level of debt, compared to 34% of all British adults, and that almost a quarter (24%) of them said they do not have any savings at all at the moment.
Around the same proportion of those surveyed felt that their financial situation would worsen (18%) in the next six months compared to the number that thought it would improve (16%), while 40% said they sometimes or often struggled to make it to their next pay day.
Andrew Haslam, North East chair of insolvency and restructuring trade body R3 and head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “Credit cards can be a quick fix for financial problems but with low interest rates, lengthy interest-free periods, and a poor period of real wage growth, they often become a necessary crutch for some households.
“The problem is that credit card debt can be so easy to accumulate. Contactless payments and automatic minimum repayments can make it easy to lose track of spending and the total amount owed.
“For many, credit card debt is affordable, with interest-free periods and transferable balances helping to make things manageable, but it is very easy to be caught out or for small balances to snowball. Where people have outstanding balances which are several years old, you worry about whether that debt can actually ever be repaid.
“The recent rise in the Bank of England’s base rate underlines that borrowers can’t assume that the current low interest rates that many enjoy will be around forever.”
After credit card debt, the most common causes of debt concern in these regions for those already worried about their current level of debt were bank loans (26%), overdrafts (17%) and mortgage repayments (12%).
Rising food prices were cited by more than half of those who often or sometimes struggle to make it to payday (53%) as a reason for this, followed by making credit card repayment (32%), household energy costs (31%) and spending on going out/non-essentials (29%).
Andrew Haslam continues: “When taking on any kind of new debt, it’s always very important to have a plan for how to repay it.
“Taking on more debt or continually putting off repayments is not the answer and will only make existing financial situations worse, while credit cards are never a long-term solution for serious financial difficulties, but can sometimes be treated like that.
“It’s really important that anyone worried about their debt or struggling with their finances, speaks to a qualified and regulated expert about their options as early as they can, so that they can retain access to the widest range of possible solutions to their problems.”