Brits turn to debt to keep up with Joneses

A third Britons are racking up debts to make sure they appear wealthier than they are.

Despite the prospect of the credit crunch making borrowing harder, 34 per cent of people admit to spending beyond their means to keep up with their peers.

Jim Hodgkins, managing director of CreditExpert.co.uk, said: "The desire to keep up with friends isn’t new and there is always a temptation to use credit to do so.

"But using credit to fund a lifestyle you can’t really afford can lead to huge financial problems and if you don’t keep tight control of your spending and how much you’re borrowing, you can easily find you can’t afford the payments and start to fall behind with them."

He added that falling behind with debt repayments will exacerbate any problem, as the credit crunch is making banks more reticent about lending to those with a poor credit record in the past.

The CreditExpert research also revealed how people are falling into debt – with one in ten admitting spending beyond their means to pick up the latest gadgets, while 18 per cent of men would get into debt to buy an impressive car.

Owning tailored suits and dining out were also leading people to spend more than they can afford to keep up with the Joneses.