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New research suggests that rising levels of debt will change people’s spending habits, forcing many to lease goods rather than purchase them.

The Future Laboratory states that the trend originated in the US but will soon catch on in UK shores, with a boom in leasing expected this year.

Gwyneth Holland, trend and research editor at the Future Laboratory, told the Western Mail: “Young people are being weighed down by debt.

“Because they can’t afford to buy their own property, they’re leasing for longer instead.”

Robin Croft, a principal lecturer at the University of Glamorgan’s business school added that the trend for leasing started in the automotive industry.

However, it is now widespread in other areas such as furniture and other goods, suggesting consumer lifestyle are forcing a shift in spending habits.

In related news, proper financial decision making has been described as necessary to keep people on low incomes out of debt.

The Citizens Advice warned that a combination of poor decision making combined with low income can lead to debt problems.

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The Consumer Credit Counselling Service (CCCS) has issued advice to consumers who might be heading to the January sales following a heavy Christmas spend.

It says that there are certain warning signs people should watch out for, which might indicate that they are entering debt.

James Ketchell, spokesperson for the CCCS, says that people should work out what percentage of their earnings are going where.

He adds: “The main warning signs are if you find that 20 percent of your outgoings are paid to credit, excluding your mortgage.

“If you do find yourself in that position then you are possibly becoming overstretched and you will need help from an organisation such as the CCCS.”

Mr Ketchell continues that people who are worried about debt are advised to pay off store cards first, since these tend to have higher rates of interest than normal credit cards.

Store cards from Argos and British Home Stores currently have interest rates of 29 per cent, which is about six-times the headline rate.

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Which?, the consumer watchdog, recently released advice to borrowers on ways that consumers can make the right decisions when borrowing money.

The guidance comes as shoppers head out to the January sales, having already possibly spent a lot during the Christmas season.

James, Ketchell, spokesperson for the Consumer Credit Counselling Service (CCCS), warns shoppers to think carefully about whether they can afford items before they go out and buy them in order to avoid debts.

He says: “At this particular moment there are lots of advertisements on the television for new kitchens and sofas.

“This might prove too empting for some and you have to think ‘can I afford it?’”

Mr Ketchell adds that people should read the “small print” and assess how much the cost of goods they want will be in the long-run.

The news comes as the CCCS warns people spending more than 20 per cent of their outgoings on credit are more likely to get into debt.

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According to James Ketchell, spokesperson for the Consumer Credit Counselling Service (CCCS), the fact that in-house figures which show credit card borrowing to have fallen since August is a good sign.

“We have seen since August last year that overall credit card borrowing has actually dropped, so we are seeing a more responsible consumer emerging,” said Mr Ketchell.

“The issue is that there are still a small percentage of people managing their debts and they still need as much help as we can give them.”

However, he stressed that people still need to consider the long-term financial effects spending large amounts of money after Christmas, such as buying a new kitchen or sofa.

Despite the CCCS’ findings, both the Bank of England and the British Bankers’ Association believe that net credit card lending actually increased in November.

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This warning from Moira Haynes, spokesperson for Citizens Advice, comes as consumers make a decision about how much money to spend in the January sales and whether they need to take out credit.

Ms Haynes remarked that lenders ought to think twice about offering unsolicited credit to potentially vulnerable people and should also make sure that people are in a position to repay their debts.

Ms Haynes said: “Low income, combined with badly informed and poorly understood financial decisions, are at the root of many of our clients’ debt problems.

“Improving people’s financial skills and confidence is crucial to helping them manage their money and use credit sensibly.”

Consumer magazine Which? is advising people to shop around for credit so that they get the best possible deal.

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According to Which?, a cheap way of borrowing money is to take out an unsecured personal loan, as they often have some of the lowest interest rates on the personal credit market.

As well as being a good source of finance over a long period, unsecured loans have the additional benefit of not being borrowed against a property. In fact, Which? said that using a house to secure a loan is “a last resort”.

Malcolm Coles, from the magazine, said: “Many of us will have overspent over the festive period, or be planning large purchases in the January sales, so it’s a good time to sort out our finances.

“It’s really important to shop around to make sure that you get the best deal on credit.”

According to a survey by Alliance & Leicester, nine per cent of respondents said they are considering taking out a low-rate loan this year in order to tackle their debts.

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According to the Bank of England (BoE), lending to individuals in November grew by £1 billion, slightly down on October’s increase of £1.1 billion.

Net credit card lending rose by £0.2 billion in November, while other loans and advances grew by £0.9 billion.

This follows figures from the British Bankers’ Association (BBA) that found underlying net lending on credit cards rose by £0.1 billion in November, while net lending on loans and overdrafts fell by £0.1 billion.

The BoE said that the annual growth rate of consumer credit in November remained unchanged at 6.2 per cent, although the three-month annualised growth rate grew by 0.4 per cent to six per cent.

According to the BBA, monthly credit card spending and the value of new personal loans have both been generally lower in 2006 than in the previous two years.

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Nick Lord, head of money advice at the charity, has said he is worried by the number of households unable to make mortgage payments.

According to the Department for Constitutional Affairs, there was a 22 per cent rise in repossession orders between June and October of last year, compared with 2005.

Speaking on BBC Radio 4’s You & Yours programme, Mr Lord said that homeowners are struggling with their mortgages because of factors that include recent interest rate hikes and rising fuel costs.

“I think for many people we are now seeing the limit, the tipping point,” he stated.

Ray Boulger from mortgage broker John Charcol has said it is unlikely that the Bank of England (BoE) will raise interest rates above 5.25 per cent this year.

“Based on the interest rate futures market, the consensus is that the BoE rate will see one further increase to 5.25 per cent and end the year there,” he stated.

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The BBA also revealed that underlying net lending on credit cards grew by £0.1 billion, compared with a £0.3 billion decline in October.

This is the first time in many months that BBA figures have not shown personal loan and overdraft lending to have increased as credit cards decreased.

David Dooks, BBA director of statistics, said that unsecured lending “remained very subdued”, despite the unusual rise in credit card borrowing.

“Monthly spending on credit cards and the value of new personal loans taken out have been generally lower in 2006 than in the previous couple of years, while repayment levels have been maintained, leading to this year’s picture of subdued borrowing,” he explained.

According to research by Lloyds TSB, eight in ten UK consumers expect the cost of borrowing to be higher at the end of the year, with less than one in 20 expecting rates to fall.

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The pressure to spend excessive amounts of money during Christmas and new year means that people are much more likely to face hardship at the start of 2007, according to Chris Tapp, from money education charity Credit Action.

“The financial pressure in January is much greater than at any other time of the year,” he stated.

“So we do see an increase in the number of calls in January – but it tends to be a ‘fire fighting’ situation where people are in a bit of a pickle.”

Many organisations believe that Christmas is a time when people feel the problem of personal debt to be at its most pronounced, while the new year tends to be when spenders finally address their problem.

However, Moira Haynes, spokeswoman for Citizens Advice, said that while it is normal for people to sort out their personal finances at this time of the year, the growth in the number of people needing assistance is “alarming”.

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