Debt Consolidation Needed to Tackle £3bn Overdrawn

The collective bank balance of the UK's younger generation is well into the red, according to new statistics.

Figures released by financial comparison site uSwitch.com have revealed that as many as 1.8 million Britons between the age of 18 and 29 are permanently overdrawn, demonstrating the need for debt consolidation loans to help young Brits manage their finances more effectively. By taking out a debt consolidation loan, a person can put all their debts into one, more manageable, monthly repayment, reducing the likelihood that they will become overdrawn because of many different debts biting into their bank balance over the course of a month.

While six million young Britons have bank accounts which contain an optional overdraft facility, two-thirds of them regularly exercise this option because of the various financial burdens placed upon them during the course of a month. More than one in five young Brits admitted to owing over £1,000 to their account, while the average overdraft among this age group currently stands at £656.

The survey claims that this high proportion of young people using overdraft facilities is twice the national average. One reason for such high levels of debt has been the impact on bank balances of attending university and, with recent changes to the funding of higher education, it is anticipated that the debt concerns of young people will only get worse. Further, unless the current generation of young Britons is able to solve their debt problems over the coming years, for example by taking out a debt consolidation loan, they will have less money to provide for their children by the time they are preparing for university.

Nick White, head of personal finance at uSwitch, commented that many young people have a "relaxed attitude towards debt" which is resulting in many Britons happy to get into debt "as a means of paying for life's essentials".

Mr White added: "In most cases the first time young people are introduced to credit will be in the form of an overdraft, often interest-free, and understandably there is a temptation to utilise what is on offer without thinking about the long term consequences."

However, Jason Clarke, a spokesman for Halifax, has rejected suggestions that young people are naïve when it comes to debt. "Young people now are probably more aware of debt issues," he suggested.

Mr Clarke continued: "We are beginning to see a different approach to student financing. Parents start saving from the day that their child is born."

Taking out a debt consolidation loan can prove a useful way to reduce the burden on your bank account, thereby making it less likely that you will continually need to dip into the overdraft facility, which can become a dangerous habit.

About the author:
Diana Middleton writes on matters relating to debt advice in the UK, and especially debt problems. She is particularly interested in personal finance, writing on best approaches to getting a secured loan, debt advice in the uk and the background issues relating to debt consolidation.