Credit cards will pay penalty for World Cup spending spree

Grant Thornton says the World Cup has led to an unprecedented rise in personal spending, with 1m being borrowed every four minutes.

The accountancy firm also says there is evidence to show that many debtors live well beyond their means. It warns that financial catastrophe can be expected when a big event – in this case the World Cup – reveals consumers’ borrowing to be out of control with no savings to cushion the blow.

Grant Thornton says the average person has 3,000 more in unsecured debt than they did five years ago. And the Bank of England says that at the end of last year, Britons owed over 1.148trillion on mortgages, personal loans and credits cards. This is increasing at the astonishing rate of 1m every four minutes.

Mark Allen, head of the national individual voluntary arrangement department at Grant Thornton, says: “Football fans will celebrate, indulge themselves and spend, spend, spend, but credit cards will pay the penalty.”

He says that brokers may often only have part of the solution, through no fault of their own.

Allen adds: “Mortgage brokers are increasingly seeking our help on how to advise clients who have significant and unmanageable levels of personal debt. Thankfully, IVAs may solve this problem.”

An IVA is a legally binding way to reduce the amount overindebted consumers repay, stopping further interest charges and reducing repayments.