How are families handling their debts?

According to the latest Aviva Family Finances Report, the average UK family owes £11,101 in January 2013 (not including mortgages). That's the highest level of debt recorded by the report since it began.

In August 2012, when the last report was carried out, the figure stood at £10,563.

So how are families choosing to borrow? 39% opt for credit cards - the most popular form of borrowing, followed by overdrafts (26%) and personal loans (22%). Credit card borrowing has increased (by 17%) since August 2012, whereas overdraft borrowing has fallen by 10%.

The type of credit you choose seems to depend on the kind of family you are. For example, widowed/divorced/separated parents were the group most likely to use credit cards (44%).

Single parents are mostly likely to regularly make use of overdrafts (34%), personal loans (28%), store cards (19%) and hire purchase agreements (12%).

Single parents are also most likely to turn to less 'mainstream' forms of borrowing. For example, in August 2012, 8% of single parents were turning to payday loans and pawnbrokers. By January 2013, however, this had increased - 14% were using pay-day loans and 9% were using pawnbrokers.

21% of committed couples with family plans and single parents have borrowed money from members of their family. The average figure for all families is 15%.

You'd think, as borrowing is at its highest level since the Aviva Family Finances Report began, that people would be increasingly concerned about their repayments. This doesn't seem to be the case, however, as the percentage of families concerned about keeping up with their repayments has actually fallen to 11% in January 2013 (from 12% in August 2012).

An expert from debt management company Gregory Pennington said: "It's encouraging to see that - although borrowing is relatively high - most people seem to be confident that they'll be able to keep up with their repayments.

"If your repayments are becoming a problem, however, seeking professional debt advice could be the best way for you to find an appropriate solution."

Helen Gradwell

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