The Money Stop

With financial conditions worsening under the current credit crunch, people are increasingly turning to credit to make up any shortfalls in their budgets, Fool.co.uk has said.

David Kuo, head of personal finance at Fool.co.uk, also said that credit fraud is likely to increase as people struggle to cover their living expenses.

People are increasingly seeing their personal finances being stretched as they face bigger outgoings due to rising household expenses. At the same time, salaries have not risen fast enough to cover the increased costs, Mr Kuo said.

Capital Economics recently reported that average earnings growth is set to remain at just under four per cent a year while food inflation is expected to stay at six per cent over the coming months.

“Initially it just starts with [people] saving a little less money…the next step is [people] start raiding [their] savings in order to try and cover [their] outgoings. The third step is [people] have to use credit in order to try and patch up any holes in [their] budget,” commented Mr Kuo.

Related Posts

Axa: Teenagers blow budgets in experiment

More than two-thirds of teenagers taking part in an experiment set up by the AXA Financial Task Force blew the budgets they were given for a week's worth of household spending.Given a budget of £248.40

Debt cycle ‘carries on’ with payday loans

Regularly using payday loans to get through until the next paycheque can lead people into a spiral of debt, National Debtline has warned.Spokesperson Beccy Boden Wilks said that payday loans can have high interest rates

Consumer wellbeing ‘worsening’

Many consumers are facing increasing strain on their day-to-day living costs and spiralling levels of debt, according to research from financial experts. Findings from the Financial Reality Index from the Alliance Trust, which analyses factors

Credit card users ‘want online services’

Most credit card users want the option of managing their account online, although it is not a key consideration when choosing a credit card.Eighty per cent of respondents in a survey conducted by consumer research

Credit card spending hits record levels

British consumer spending on credit and debit cards hit record levels during the last quarter of 2006, reveals new research. Findings from the Association of Payment Clearing Service (APCS) showed that out of the total

Paying off last year’s debts contributing to budget strain

Paying off last year's debts and current levels of inflation are both using up consumers monthly budgets, one debt expert has claimed. Debt Action said as inflation has kicked in, people have found that more

Tighten your belts as household costs rise, says expert

Consumers are being told to be careful with their money and 'tighten their belts' because of the rising costs of many essential household items and bills. Money education charity Credit Action has said people have

Spenders need to work out their budgets

Sitting down and working out your personal budget is the best way to begin reassessing your money, according to financial experts. The Consumer Credit Counselling Service (CCCS) said that the most accurate way of accounting