Almost a third of consumers aged 18-25 have borrowed more than ?1,000 over the last year according to a new report from Equiniti.
In compiling the report entitled Great Expectations – The Demanding Market for Credit, Equiniti found that 30 per cent of the 18-25 age group borrowed the money, equating to around 2 million consumers and the highest proportion of any demographic.
The debt referred to does not include university fees and maintenance grants which will be deducted from the pay packet of those earning over ?21,000, soon to rise to ?25,000.
Almost half of those surveyed (46 per cent) said that they took the credit to overcome a shortfall in their finances, while just 13 per cent said that it was to broaden their monthly budget.
The age group were responsible when taking out the credit however, with 40 per cent comparing over five separate loan providers before taking a loan, and 90 per cent confirming that they used an online comparison website.
18-25 year olds do seem to be responsible when approaching credit, with 31 per cent stating that they feel comfortable using credit.
Managing Director of Credit Services at Equiniti, Richard Carter, commented: ‘There is no doubt that for many young people, money is tight at the minute, and so it is little surprise that the 18-25 age group has the highest rate of borrowing over ?1,000 in the past 12 months. Wages are failing to keep up with inflation and so credit is one way in which the youngest can cope with financial shocks, to plug unexpected, short-term gaps.
‘However, it is crucial that we protect these consumers from falling into perpetual debt, which may damage their long-term economic prospects. This is why Equiniti encourage young people to seek proper advice about their financial options and, if taking out a loan appears the best option, to shop around using comparison websites to ensure they are getting the best possible deal.’