Youngsters have lowest credit card debts -study

LONDON, Apr 21 (Reuters) The British public have huge misconceptions about which age groups suffer the worst debt problems, according to a survey today from Alliance&Leicester.

According to the bank, those aged 18 to 29 have the lowest levels of credit card debt.

The survey also dented popular myths about Scottish thriftiness with those north of the border having the highest non-mortgage debt -- 28 per cent of their incomes compared to an average of 22 per cent nationally.

Londoners and those in the southeast were found to have amongst the lowest proportion of non-mortgage debt, despite the high-spending, high-living perception of those living in the capital.

The biggest users of credit cards were 30 to 50 year olds, with an average credit card debt of 2,580 pounds, the survey found. This compared to an average debt of 1,073 pounds for those in the 18-29 age bracket.

''The young are using credit responsibly,'' said Alliance and Leicester. ''Whilst young people have the highest debt-to-income ratio, half of this is low cost student loans, so the cost of servicing their debt is lower.'' Chris Rhodes, managing director of Alliance&Leicester retail banking said: ''Our research confounds the stereotype that young people are spendthrift and irresponsible with their finances.

''Student loans are the largest commitment and whilst interest on these is low, it still seems to constrain their appetite for other debt.'' But the Citizen's Advice Bureau, which has long been campaigning for debt levels in the UK to be addressed, was not convinced.

''It may well be the case that those aged 18-29 have lower levels of credit card debt but this is undoubtedly because they have less opportunity to run up debt,'' said a spokesman.

''They earn less so they are likely to be offered less credit.

''College and university leavers often have no record of living at one address for more than six months at a time or have no earnings history of any length,'' he added. ''This would impact on their credit score and how much, if any, credit they would be offered.'' According to the Alliance&Leicester Borrowing Thermometer, base rates would have to rise to 8.5 per cent from their current 4.5 per cent before the UK returned to the debt crunch of 1990 which led to thousands losing their homes.

But the CAB insisted debt levels were already reaching crisis point and that now was not a time to play down the debt issue.

''Last year we had 1.25 million people approach us with debt problems, the highest ever and double the number eight years ago,'' said the spokesman.

''Whatever age group you look at, the figures are absolutely shocking and this problem has to be tackled now.'' REUTERS PR BD1102