Iona was on Sky News this morning commenting on a Sky survey which found 65per cent of 18 to 34 year olds are worried about what will happen when interest rates start to rise.
At the same time, new analysis from the debt charity Stepchange shows that more and more young people are seeking emergency advice on how to manage their finances, and deal with problems managing their credit.
Nearly two-thirds of the people coming to the charity for help are now under the age of 40 – just six years ago, that group made up only half of Stepchange’s clients.
Iona said credit was “a sticking plaster for many young people who are really just struggling to get by” and went on: “We are the last generation to miss out on any financial education in schools, while older generations were able to benefiting from a housing system which worked in their favour. Younger people are finding their take-home pay is being swallowed up by the cost of rent, and just the pressure of day to day living makes them turn to credit to get by.”
Iona said some forms of credit were essential, such as that needed to get on the housing ladder, or for specific purposes, and it was important for people to build up a healthy credit rating. “The problem comes when it becomes a way of life or a way for us to survive.”
On how to manage their borrowing, Iona said the minimum credit card repayment level “is not the level you want to be paying” as it prolonged the life of the debt and made it more expensive in the long-term. “You should also steer clear of payday loans, which are a high-cost form of credit although there have been curbs brought in on their cost.”
On the effect of rising interest rates, Iona said people were right to anticipate a probable first rise in November, but that would not necessarily translate to a change in the rates charged on credit cards or other borrowing across the board. “Generally speaking it pays to budget and save what you can, so you can dip into that pot and not rely on credit to get by.”