Unsecured debt has become harder to pay off for one in two households.
Loans and credit card repayments have become a burden for British families.
Over half of UK households saddled with financial worries found it difficult to meet loan and credit card repayments, according to Bank of England research.
The annual report, which polled 2,000 homes, found that 51% of respondents described their unsecured debts as a “burden” and one in two households said their disposable income had fallen over the past year.
The majority of participants said their monetary worries had increased over the last 12 months.
More than a fifth of people said they didn’t want to spend their money because they were concerned that it was becoming harder to borrow cash. A massive 90% of people said they expected to be heavily affected by the austerity measures introduced by the government.
The research concluded that one in four households found it difficult to keep up with bill repayments last year with many families worried about the VAT rise planned for early 2011. It also found that 22% of homes were concerned about getting access to credit from banks.
The report said: “The burden of unsecured debt has risen this year, most likely reflecting a combination of weak earnings growth and the interest rates on unsecured debt remaining high over the past two years”.
Over a fifth of households said they would attempt to save more in a bid to get a better handle on their finances. However, less than half of respondents said they had taken steps to deal with the budget cuts by working longer hours or finding a new job.