Press release:

Seven million Brits claim to be living debt free despite owing millions, UK’s debt profile reveals

  • Seven million Brits don’t consider they are in debt, despite having at least one credit agreement with a lender[1]
  • Three quarters (74%) of consumers[1] are in debt owing a total of £209 billion – an average of £5,688 per person[2]
  • A fifth (18%) have missed a repayment within the last 12 months[3]  and one in five (20%) have had their credit score negatively impacted due to their debt management[4]
  • With nearly a third (31%) admitting they struggle to manage their debt[5], uSwitch.com urges consumers to take the time to check their monthly payment contracts and always make their minimum monthly repayments.

Just under seven million Brits believe they are living debt free despite owing millions, according to the first consumer debt profile from uSwitch.com, the price comparison and switching service. The research shows that while three quarters (74%) of consumers are in debt, one in five (14%)[1] don’t realise their monthly bills, for example their car insurance or store card payments, is actually repaying money they owe.

Those in debt owe a total of £209 billion, an average of £5,688 per consumer[2]. However, given that nearly one in five (18%) have missed a repayment within the last 12 months[3], millions are treading a tightrope when it comes to staying on top of their financial obligations.

Car loans are typically the biggest liability consumers have, with those paying for their car monthly owing on average £3,275[6]. Personal loans liabilities are the next biggest outstanding debt, average of £2,982, ahead of credit cards (£1,947) and payday loans (£1,101)[7].

The most common debt held in the UK, excluding mortgages and student loans, are credit cards (45%) and personal loans (21%). Other types include credit agreements to pay for mobile handsets (18%), overdrafts (16%) and home insurance (15%), which complete the top five debts Brits are most likely to hold[8].

Home improvements (25%) and holidays (21%) are the main reasons for taking on debt[9]. Troublingly the main reason for those aged 18-34 is food costs, along with improving their credit rating (both 24%). However, this doesn’t seem to be paying off, as a third in the age group (33%) have admitted to missing a repayment within the last 12 months – which can severely damage your credit rating[10].

For more than four in ten (43%) it’s been more than a year since they checked their credit score, if at all[11]. This is despite the fact one in five (20%) have had their credit score negatively affected because of how they have managed their debt[12].

With nearly a third (31%) of consumers struggling to manage their debt, and a fifth (21%) feeling compelled to lie about how much debt they have[13], uSwitch.com is calling on consumers to carefully consider the monthly agreements they have and ensure they are always meeting their monthly minimum repayments by setting up a direct debit or monthly bill reminder.

Tashema Jackson, money expert at uSwitch.com, says: “It’s incredible that seven million Brits believe they are debt free, but have actually signed up to a credit agreement. A lack of knowledge about what liabilities they have, combined with many struggling to manage their debts, could spell trouble ahead – especially for those who have become reliant on cheap credit to fund their lifestyles.

“The truth is that it is increasingly difficult to avoid taking on debt, especially given that premium smartphone prices are now at an all-time high and insurance costs continue to rise. However, in some cases, you may be better off using a 0% purchase credit card or taking out a personal loan to pay for them outright. Taking the time to do a little research can make a huge difference to the total debt you take on.

“When repaying your debt, it is important to do so in a responsible manner. Always make the minimum repayment, ideally set up a direct debit to take pay the bill monthly. Then, if you can, pay more than that minimum payment whenever possible as it could significantly reduce how long it will take you to pay off your debt and the interest you’ll pay.

“For those really struggling, speak to your bank and see if they can help. If you are still concerned, charities such as StepChange offer free and impartial advice to help get your debt under control.”

Find out how you could save over £1,000 a year with uSwitch here.

— ends —

Notes to editors

All research referred to was conducted by Opinium between 20th – 24th April 2018, with 2,037 nationally representative UK adults (aged 18+).

 

  1. Calculation based on number of adults in the UK over 18yrs which, according to ONS, is 51.7 million. Subtract 2 million UK adults who don’t have bank accounts from the Financial Inclusion Commission and that leaves 49.7 million. When asked ‘Do you currently have any outstanding debt?’ 60% of respondents answered Yes. When asked ‘What type of debt do you currently have? 74% of respondents chose different debt options. The difference between these two figures is 14%. 14% of 49.7 million is 6.95 million.
  2. Bank of England’s latest Money and Credit statistical release reported that there was £209.2bn in consumer credit debt in the UK. 74% of 49.7m (population of the UK with a bank account) is 36,778,000. £209.2 billion / 36,778,000 = £5,688.18.
  3. When asked “Have you missed a repayment for any of the debts you hold within the last 12 months?”, 18% of respondents answered ‘yes’.
  4. When asked ‘Have you ever had your credit score negatively impacted because of how you’ve managed your debt?’, 20% of respondents answered ‘yes’
  5. When asked ‘How far do you agree, or disagree with each of the following statements? I have struggled with managing debt’, a net 31% of respondents agreed.
  6. When asked ‘For each of the following types of debt you currently have, how much do you currently owe? – Car Loan’, the average amount owed by respondents was £3,275.93.
  7. When asked ‘For each of the following types of debt you currently have, how much do you currently owe? – Personal Loan’, the average amount owed by respondents was £2,982.35, ‘Credit Cards’ the average amount owed by respondents was £1,947.43 and ‘Payday Loans’ the average amount owed by respondents was £1,101.46.
  8. When asked ‘Excluding any mortgages and student debt, what type of debt do you currently have?’, 45% of respondents selected ‘credit card with outstanding payment’. 21% selected ‘personal loan’. 18% selected ‘I pay for my mobile phone handset monthly (and therefore have a loan with the mobile phone company)’, 18% selected ‘overdraft’, 15% selected ‘home insurance’.
  9. When asked ‘What have your motivations been towards securing credit?’, 25% of respondents selected ‘home improvements’. When asked ‘What have your motivations been towards securing credit?’ 21% of respondents selected ‘purchasing holidays’.
  10. When asked ‘What have your motivations been towards securing credit?’ 24% of the age group 18-34 years selected ‘Food Costs’. When asked ‘What have your motivations been towards securing credit?’ 24% of the age group 18-34 years selected ‘To improve my credit rating’. When asked ‘Have you missed a repayment for any of the debts you hold within the last 12 months?’ 33% of the age group 18-34 years selected ‘Yes’.
  11. When asked ‘When did you last check your credit score’, 15% of respondents selected ‘longer than a year ago’ and 27% selected ‘I have never checked my credit score’. 15%+27%=41%
  12. When asked ‘Have you ever had your credit score negatively impacted because of how you’ve managed your debt?’, 20% of respondents answered ‘yes’.
  13. When asked ‘I have struggled with managing debt’, 31% of respondents agreed. When asked ‘Have you lied about the amount of debt you had previously’, 21% of respondents agreed.

About us

Launched in September 2000, uSwitch is an online and telephone price comparison and switching service, helping consumers get a better deal on gas, electricity, broadband, TV services, mobiles and personal finance products including mortgages, credit cards, car and home insurance. Last year we saved UK consumers over £278 million on their energy bills alone.

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