New figures indicate that Britain's debt difficulties are being compounded by those underestimating their debts. According to research carried out by Mintel, consumers are underestimating the amount of money that they owe by billions of pounds. In a survey conducted by the market research firm, borrowers were asked how much they had left to pay on their unsecured loans. The average answer was ?5,251, however the Bank of England reports that the typical adult actually has some ?10,300 outstanding. Consequently, the company suggested that "worryingly" Britons are in twice as much debt than they are actually aware of. As a result, it was purported that 21 million people - a figure just under half of the adult population (43 per cent) - are more than ?100 billion in arrears beyond their estimation. However, only a fifth of those with unsecured debts currently claim to be worried about how much they owe.

In contrast, secured loan borrowers were said to have a more accurate idea about their finances. The Mintel survey of mortgage holders showed that respondents believe they have some ?92,200 outstanding. Meanwhile, figures from the Bank and various mortgage lenders state that the average amount owed is ?95,000. As a result, the study suggested that Britons have a "much better handle" on their property-based debts.

Commenting on the study, senior finance analyst Toby Clark said: "While Brits do seem to have a good grasp of their mortgage borrowing, they are wildly underestimating the amount of money they owe on credit cards and loans. Clearly, it is a lot easier to keep an eye on a single mortgage, than it is to juggle a couple of credit cards, a personal loan, a car loan and maybe even an overdraft as well." "There is a desperate requirement for financial education and for an initiative that prompts borrowers to re evaluate their debts. Without a detailed understanding of exactly how much they owe and what rates they are paying, it is easy to see how the situation could spiral out of control," Mr Clark added.

Research carried out by the firm indicates that those households on low incomes - those who earn less than ?15,499 a year - are borrowing to help meet the cost of day-to-day expenses. A reported 11 per cent of such consumers were said to use credit to meet regular demands for payment on areas such as phone bills. Meanwhile, 29 and 11 per cent of low earning adults are said to use money they have borrowed to help raise their children and pay taxes. However, these proportions fell to 21 and six per cent for Britons judged to be wealthy with an annual salary of ?50,000 or more.

The findings also revealed that well off families utilise credit to help supplement their assets. Just under two-thirds (63 per cent) borrow to help meet mortgage costs for their home, with 13 per cent using the money to fund the purchase of a second property. Also according to Mintel "paying for their children's further education accounts for 9 per cent (one in ten) of well off consumers' debts.

In figures released by PricewaterhouseCoopers earlier this month, borrowers of all types were reported to be paying back more money servicing debts. During the three-month period from April to June, households were said to be putting 19 pence of every pound they earned towards making credit payments - the highest proportion recorded since the third quarter of 1990. Head of macroeconomics John Hawksworth claimed that more consumers are facing pressure on their finances as a result of increasing energy and petrol bill costs combined with only "modest" rises in annual earnings. Because of this, he claims that consumer spending will fall over the coming years as day-to-day finances are impacted upon by 'debt obligations'.