Two in five Londoners live on credit

MORE than a third of Londoners are living on credit, routinely using their plastic or borrowing extra cash to pay household bills and meet other everyday expenses, a study shows.

The survey, from Citizens Advice, also shows that one in three Londoners with loans and credit cards have no idea how much they owe.

Two out of five of the people questioned for the study admitted routinely using loans or credit cards to keep themselves afloat. The figure, which is twice the national average, will reignite fears that millions of people are overstretching themselves financially.

David Harker, chief executive of Citizens Advice, said: 'There is a very fine line between handling credit commitments comfortably and slipping into debt.

'Using credit simply to get by until the next pay cheque or to pay household bills can indicate problems on the horizon. A substantial minority of people are extremely vulnerable to even a slight change in their circumstances, which could saddle them with serious debt problems for many years to come.'

A growing number of experts are warning of a looming debt crisis. Including mortgage debt, Britons owe £35,000 per household on average, or 120% of disposable income.

Citizens Advice, which today launched an online questionnaire to make consumers more aware of the pitfalls of chalking up credit, said a quarter of people struggle from time to time with their bills.