More young people in debt and resorting to personal loans to keep afloat

A leading youth charity has claimed that the majority of young people are falling into debt before they reach the age of 21, and that it is becoming an accepted part of their lifestyle.

Rainer, a charity that aims to help under-supported young people, found that 77% of those surveyed had taken out personal loans before turning 21; almost one third admitted debts in excess of £5,000 and one in five sums exceeding £10,000. Despite recent media coverage highlighting the rising indebtedness of graduates, less than half of those questioned attributed their entire debt to student loans, while 32% said they funded their lifestyle by credit cards and a further 38% regularly used their overdraft facility.

Rainer chief executive Joyce Moseley believes that being in debt is becoming part of a wider 'live now, pay later' culture and said: "Young people believe that being in debt is a normal part of today's society, but it can quickly become a millstone. In addition to the stress that it causes, there is growing evidence that debt can prevent independent living or deter young people from entering further education, and it can even effect eating healthily."

After paying off debt one in five young people are left with less than £50 a month to buy food and pay for other general living expenses, and one in ten with nothing at all. But many of those young people believe that their circumstances will inevitably improve. And when they do they will inevitably move onto another loan to consolidate their existing debt, and continue to incur more debt on top rather than work at reducing it to zero. Further evidence, believes the charity, that the 'norm' is now to incur debt 'to live' and worry about how to pay it off later, if ever.

Of those young people taking out a loan to help ease their debt woes many do not take the time to compare loans but tend to accept the first one that is offered, regardless of the interest rate or other terms. Indeed, many have their choice of loan dictated by advertising, without bothering to investigate the rest of the market. However, with UK loans rapidly becoming more expensive as a result of the global credit squeeze that is not a good strategy. As a result Rainer is calling for jargon-free advice to be readily available for young people, and for most of it to be targeted at vulnerable groups such as school leavers. With advice so readily available the charity argues that less young people will make bad choices when it comes to borrowing.

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Elisha Burberry is an online, freelance journalist and keen movie-goer from Scotland. Her interests include travelling, cooking and photography.