The consumer credit boom

8. The consumer credit boom


1. The people of the United Kingdom are estimated to  around a trillion pounds in personal debt, which is about $16,000 for every man, woman and child. Much of this debt is of course in the form of mortgages, but an ever-increasing proportion is in the form of consumer credit: unsecured   in the form of overdrafts, credit card debts, store card debts, hire-purchase agreements and the numerous other ways in which the British public are able to “buy now, pay later”.

2. An inevitable result of this is that an increasing number of people are taking on more debt than they can service. Credit cards and store cards especially can have very high APRs*, and the interest soon mounts up, pushing the borrower further and further . Repayment in full may simply become impossible.

3. Of particular concern are so called “loan-sharks”. While the major lenders such as banks millions of pounds every year in bad debts, small credit companies sometimes resort to heavy-handed measures such as sending in the bailiffs and even (although of course this is illegal) threatening physical violence.

4. Naturally, creditors try to avoid lending money to people who will not be able to . Although they may not known it, every person who has ever had dealings with a financial institution (for example, had a bank account) has a credit rating. This data is stored on computers by credit reference agencies, and before agreeing to a loan, most creditors will check the applicant’s . However, this information can be misleading. Apparently people may already be struggling to keep up the payments on their existing debts.

5. As well as having potentially disastrous consequences for people who get too heavily into debt, the boom in consumer credit could have serious repercussions for lenders. If people are genuinely unable to repay their debts, ultimately there is very little their can do about it.



1. Money owned by people, not business.

2. Paying for something like a sofa or a car in installments.

3. Increases

4. …of all the money

5. Having problems

6. Maintain

7. Cause big problems.



1. What is the difference between a secured loan and an unsecured loan?

2. What is a bad debt?

3. What does a credit reference agency do?

4. What does a bailiff do?



1. apply for a loan             a. arrange a loan

2. set up a loan                b. decide the borrower will never repay the loan.

3. take out a loan              c. get a loan

4. pay back a loan             d. repay the loan in installments

5. pay off a loan               e. repay all the loan at once

6. write off a loan              f. ask for a loan



1. Creditors have lent too much money, and are starting to have serious problems.

2. British people love to “buy now, pay later”, but the majority of them are not very creditworthy.

3. Creditors are lending more and more money, and this is causing an increase in debt-related problems.

4. if more creditors used to credit-reference agencies, there would be fewer debt-related problem.

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