Think Tank reveals debt 'Harm Index'

Payday loans, council tax, rent arrears and overdue utility bills have been identified by Demos as the types of debt that have the worst effect on people. The finding is based on the think tank’s new ‘Harm Index’, which assesses the financial, emotional and social consequences of different forms of debt.Demos asked people to rank each of their debts based on their negative impact,such as legal consequences, mental wellbeing and affordability. Mortgage debts were given a Harm Rating of just 23 out of 100. By comparison the types of debt that people felt had the greatest negative impact included payday loans (68), council tax arrears (62), utility bills (57) and doorstep lending (50).Demos analysis reveals that debt, including total arrears, combining unpaid rent and council tax, and overdue utility bills such as gas and electricity, comes to £4.7bn – almost £200 per household.The think tank has therefore called for the official measure to acknowledge arrears in order to achieve a complete picture of the nation’s debt problem and ensure those struggling with arrears receive targeted advice.The report also recommends:

·     Implementing a traffic light rating system on all debt products and adverts – similar to food packaging – clearly illustrating the potential harm of a loan, the average amount repaid per £100 borrowed and the risks of not repaying.

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