19th January will be Britain’s poorest day with a third of consumers unable to meet all their financial commitments
Thursday 19th is poorest day of the year as Brits wait up to 45 days between their December and January paydays
December is the highest spending month of the year – a third (33%) higher than any other month – with essential household spending rising from an average of £585 to £776****
Two million people will take up to six months to get over their increased seasonal spending
A third (32%) of consumers don’t think they’ll meet all their financial commitments this January, rising to two fifths for those aged 18-34 (43%)
After £11 billion was put on plastic to fund Christmas, one in ten believe they will default on their credit card repayments this year
A further one million homeowners are in danger of defaulting on their mortgage payments.
Millions of Brits are set to reach a financial crisis point on Thursday 19th January 2017 according to analysis from Uswitch.com, the price comparison and switching service. A payday gap of up to 45 days between December and January, combined with heavy spending over the Christmas period – a third (33%) more than any other month – has forced many consumers to start 2017 in the red and on the financial back foot.
Compounding the effect of the longer wait between pay days is the UK’s inflation rising to a two year high. A third (32%) of Brits are concerned they won’t meet all their financial commitments this month, with the figure rising to over two-fifths (43%) among those aged 18-34. Worryingly, after £11 billion was put on plastic in the run up to Christmas, one in ten believe they will fall behind on their credit card repayments. While a million homeowners say they could default on their mortgage repayments this year.
According to the research, it will take the average consumer between one and two months to recover financially from this December spending debt burden. However, for two million people (4%) it will take until the summer of 2017 to get over their debt hangover.
At a time when total credit card debt is at its highest level in a decade – £65.7 billion – one in eight (13%) Brits will resort to taking out extra credit in January. Almost half (46%) are planning to take steps to reduce their outgoings with a fifth (21%) saying they will be going out less and another one in five cutting back on food purchases (19%). The most popular steps to save money in the new year include:
| Top steps to reduce outgoings |
%
| | Going out less |
21%
| | Cutting back on food purchases |
19%
| | Cutting back on basic utilities |
10%
| | Selling possessions or return Christmas presents |
7%
| | Cancel subscriptions i.e. Netflix or Amazon Prime |
7%
|
Source: Uswitch research, December 2016
To help combat the new year debt hangover, Uswitch is encouraging consumers to tackle their financial concerns head on and not ignore them.
Tashema Jackson, money expert at Uswitch.com, says: “For millions of consumers, this is the most financially challenging time of the year. The burden of Christmas spending and the longest wait between pay days will force many to feel the financial pinch. It’s vital that people take action now before their debts spiral out of control and it becomes even harder to get on top of your finances.
“If cutting your outgoings isn’t enough and you are relying on extending your borrowing, shopping around for the best deal is key – don’t get taken in by the first offer you see. Making sure your credit score is in good shape can ensure you are eligible for the best deals, if you need to rely on extra credit. You can do so with some straightforward steps, such as making sure you are on the voting register and applying for only one credit card or loan at a time.
“Searching for the best deals on energy, broadband, and insurance can also help cut your spending in the new year and save you over £1,000. However, if you feel like your debts are unmanageable help is at hand. Charities like StepChange offer free and impartial advice to assist you in getting debt under control.”
Find out how you could save over £1,000 a year with Uswitch here.
FOR MORE INFORMATION
Rory Stoves
Phone: 020 3872 5613
Email: rory.stoves@uswitch.com
Twitter: @UswitchPR
Notes to editors
Research carried out online with Opinium between 13.12.16 and 15.12.16 amongst a sample of 2,000 GB adults. Further stats taken from research carried out online with the Uswitch.com Consumer Opinion Panel between 01.11.16 and 18.11.16 amongst a sample of 1,261 GB adults.
When asked ‘What date do you get paid the first instalment of your main source of income in January?’, the mean was 20th 11% said ‘31st January’. 11% of 50,371,000 (ONS UK adult population) = 5,540,810 people.
28% of those polled have a gap greater than 31 days between there December and January wages. 28% of 50,371,000 (ONS UK adult population) = 14,103,880 people. The maximum gap between payments is 45 days.
While Brits spend on average £584.78 each month on items such as household bills, mobile data, food, travel, December sees a surge in costs of 33%, rising to £776.21.
When asked ‘How long do you believe it will take you to recover financially from increased spending in December and January? E.g. credit card, store card, overdraft etc.’, 4% choose 6 months or more. 4% of 50,371,000 (ONS UK adult population) = 2,014,840 people.
When asked ‘How worried are you about not being able to meet your financial commitments in January?’, 8% answered “extremely worried”, 24% answered “worried”. 8%+24%=32%.
When asked ‘How worried are you about not being able to meet your financial commitments in January?’, out of those aged 18-34, 14% answered “extremely worried”, 29% answered “worried”. 14%+29%=43%.
When asked ‘How will you pay for your Christmas festivities this year?’ 29% said they would use (at least one) credit card. 29% of 50,371,000 (ONS UK adult population) = 14,607,590 people. When asked approximately how much do you think you’ll spend on Christmas this year? (Take into consideration presents, food, drinks, decorations, socializing etc.) The average amount was £750.39. 14,607,590 x 750.39 = £10,961,389,460.
When asked ‘To what extent do you expect any of the following scenarios to take place in the next year? For ‘Default on my mortgage or rent payments’, 3% answered ‘I fully expect this to happen’ and 6% answered ‘this could happen’. 3%+6%=9%. 9% of 11,100,000 mortgaged properties (based on CML data) = 999,000. For ‘Default on my council tax payment’, 2% answered ‘I fully expect this to happen’ and 8% answered ‘this could happen’. 2%+8%=10%. For ‘Default on my utility bills (e.g. energy, gas, internet)’, 3% answered ‘I fully expect this to happen’ and 9% answered ‘this could happen’. 3%+9%=11%. For ‘Default on my mobile phone bill’, 4% answered ‘I fully expect this to happen’ and 7% answered ‘this could happen’. 4%+7%=11%. For ‘Default on my loan repayments (e.g. personal loan, payday lenders, hire purchase loan, car financing)’, 3% answered ‘I fully expect this to happen’ and 6% answered ‘this could happen’. 3%+6%=9%. For ‘Default on my store cards repayments’, 3% answered ‘I fully expect this to happen’ and 5% answered ‘this could happen’. 3%+5%=8%. For ‘Default on my credit card repayments’, 2% answered ‘I fully expect this to happen’ and 8% answered ‘this could happen’. 2%+8%=10%.
https://www.theguardian.com/business/2016/dec/13/uk-inflation-november-petrol-clothing-ons
When asked ‘How long do you believe it will take you to recover financially from increased spending in December and January? E.g. credit card, store card, overdraft etc.’, the mean was 1.3 months.
http://themoneycharity.org.uk/money-statistics/october-2016/
When asked ‘Do you plan to take out any credit in January 2017?’, 13% answered ‘yes’.
When asked ‘Will you take steps to reduce your outgoings in 2017?’, 43% said “yes” in some regard. (see above table for breakdown).
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