UK Debt Part III: Parents Take Bankerís Role for Adult Children
October 10 2007
Source: CreditandCollectionsWorld.com and SourceMedia, Inc.
As many as 7.5 million parents in Great Britain have had to help adult children pay off their debts, with the average family forking out $5,177 on behalf of their kids, according to research by MoneyExpert.com.
The most popular forms of debt slashed by parents are mobile phone bills, auto finance and credit card bills, although nearly one in 10 parents have had to help their child keep up with mortgage repayments, Credit Action, a UK nonprofit finance-education organization, reports this week.
Parents are paying on average $43,480 to help their children get on the property ladder. Twenty percent have dipped into their savings to help their children buy their first home, while a further 22% plan to offer financial help to their kids when they wish to buy. Research by Unbiased.co.uk found that 41% of 18-24 year olds are unaware of their current debt burden to within $1,000. The average graduate debt actually dropped for the first time in six years. Graduates who leave university with debt now owe on average $25,206, down 6% from a year ago.
Research from the Consumer Credit Counseling Service (CCCS) shows that debt levels for the under-25s increase with age. The average consumer debt for 24-year-olds in 2006 was $33,344. Personal loans make up 56% of this debt, followed by credit cards at 28%. Homebuyers under 25 owe an average of $41,366 on unsecured credit, compared with $24,695 for tenants in the same age group.
More than half of Englandís teenagers have been or are in debt by the time they are 17, Personal Finance Education Group research found. In addition, 90% worry about their money and spending but tend to think of overdrafts and credit cards as easy ways to spend more than they earn, or to buy things they couldnít normally afford. Forty-four percent of Britons aged 16-24 say their friends put pressure on them to keep spending even when they have run out of money.