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Debt - Worried Brits Cut Back on Spending to Avoid Debt - 07/05/2008

It seems that the credit crunch has forced consumers to become more aware of their spending with the majority of consumers saying that they will cut back this year. Consumers are more concerned about debt and more cautious about spending more than they have.

23 per cent of those questioned said that they intend to cut back on luxuries as a result of the credit crunch. People are feeling forced to make the change as they find household bills and mortgage rates increasing, reducing the amount left for luxuries.

16 per cent have chosen to forego a holiday abroad this year in order to save money, while 13 per cent are switching energy suppliers in search of better rates. Another 4 per cent plan to change their mobile phone contract.

However, 17 per cent said that they do not plan to make any changes to their spending habits, a fact that surprised David Doulton, director at fairinvestment.co.uk, who said “I am surprised by the percentage of people who do not intend to make any changes to their spending habits; I can only assume that these people either do not have mortgages or are still enjoying a fixed rate.”

Only 3 per cent planned to extend their overdraft and an even smaller number planned to take out a new credit card

“The small number of people who plan to get more credit just shows how the economy has changed. This time last year our results would have been very different because credit was easier to come by and seen by many as the easy way out,” said Mr Doulton.

"Overall though, our research shows that those who are finding that money is tighter are taking action as opposed to getting into debt. This is good news - without making sacrifices, many households will find themselves treading water, increased energy bills and mortgage rates make this inevitable for many during the credit crisis." Mr Doulton concluded.