Average Debt in the UK: Are Most Brits in the Red?

Last Updated On June 10th, 2020

Are you wondering what the average debt in the UK looks like? The situation may be more worrisome than you think.

Although the average Brit won’t begin to worry about the money they owe until it hits £6,012, studies indicate that our national borrowing levels are going up.

As wages continue to dwindle and the price of living skyrockets, UK citizens are feeling increasingly pressured to take on larger amounts of obligations. To help you see how you measure up to the national statistics, we’ve put together some useful insights into the average borrowing levels in the UK.

Here’s what you need to know.

The Average Credit Card Debt: UK Numbers

woman holding up many cardsCredit card debt is one of the main areas where the UK appears to be struggling.

Each household in the country now has an average of £2,688 left unpaid on credit cards. Studies from Finder.com show that it would take most people in the UK an average of 26 years and 9 months to pay off their obligations overall if they’re making the minimum payment each month. This is relevant when you consider the fact that around 25% of all people with credit card debt in the UK only made the minimum payment each month during 2016.

Other statistics taken from the Money Charity in 2019 found that:

  • UK borrowers paid £139 million in interest a day during March 2019
  • 1,022 people a day claimed that they had become redundant between January and March 2019
  • It costs UK citizens £22.95 per day on average to raise a child from birth to the age of 18.

Today’s consumers in the UK are beginning to rely on their credit cards for a lot more. Rather than just being a convenient way to spread costs out over an extended period of time, credit cards are becoming one of the main ways that we pay for the essential items that we need in times of financial strife. This is pushing the national borrowing of the UK to record heights.

Average Personal Debt: UK Statistics

When it comes to average personal obligations, UK citizens aren’t as frugal with their cash as they could be. The Money Advice Service found that 8.3 million people throughout the UK are suffering from excessive amounts of money owed. On top of that, the service also mentioned in a press release on May 2018 that four in 10 of UK adults only have £100 or less in savings, making it difficult to deal with financial shocks like losing a job.

According to money statistics published last March of 2018, the total personal debt in the UK has reached an incredible rate of £1.576 trillion by the end of January 2018. This means that on average, adults in the UK owe around £1,077.51 more than they did the same period the year before.

Additionally, as of January, the study states that households across Britain owe an average of around £57,943. Also, the standard UK individual should owe around £30,455 in total, including mortgages. That’s about 114% of the annual earnings for the country. The amount of money owed accumulating among residents of the UK also means that we’re all being subject to a considerable amount of interest. Based on the figures for interest rates in the January data, the amount of interest paid by UK residents is around £139 million per day.

Unfortunately, it seems as though the worst is yet to come for UK citizens. Experts believe that borrowing levels will continue to increase in the next few years with some noting that average household debt in the UK will rise to around £2.296 trillion by the beginning of 2022.

Part of the reason for this increase in overall debt is the continued growth in consumer credit and lending opportunities. Total lending reached around £207.5 billion by the end of January 2019, which is an increase from £194.3 the year before.

Average Household Debt: UK Numbers

a couple facing financial stressAs mentioned above, personal debt levels continue to increase. In the same way, household debt figures are rising too. According to the Guardian, UK homes owe an average of around £15,400 to banks, credit card firms, and other lenders. Household debt rose significantly as issues with wage stagnation forced more people to increase their borrowing.

The same report also found that each household owes around £886 more than it did 12 months ago. This refers to the average UK debt excluding mortgage payments but including student loans. To put those figures into perspective, the level of unsecured debt as a share of the money earned by your entire household is now 30.4%. This is the highest level that unsecured debt has ever been at. It’s well above the peak numbers that were previously seen in 2008 before the financial crisis hit.

While there are many reasons why average debt in the UK appears to be rising, economists believe that much of the issue comes from years of wage stagnation and public spending cuts. Additionally, the rise of zero-hour contracts also means that today’s consumers don’t have the same peace of mind that they used to have with a regular monthly wage.

Other Shocking UK Debt Statistics for 2019

Brits are travelling further into the red than ever before, driven to lending by changes in their career and consistently poor wages.

As levels of money owed go up, more people around the country are turning to groups like the Citizen Advice for help managing their spending habits and financial independence. This is leading to an influx of data available on the spending habits within the UK, and the way that we’re developing debt at an astronomical pace. Some of the most shocking numbers revealed by Finder.com this year include:

  • £1.637 trillion is now owed by individuals in Britain
  • 350 people each day are declared bankrupt in Britain
  • Every Brit spent £967 on interest in 2018 alone
  • Total interest payments on personal debt was over £50 billion (as of April 2019)
  • There’s over £1.8 trillion public sector debt in the UK
  • Households pay an average of £1,849 a year on interest alone
  • Each house has an average of £2,653 in credit card debt
  • 15 UK homes are repossessed due to debt issues each day
  • 1,213 people each day said they lost their jobs between January and March this year
  • The Citizens Advice dealt with 2,527 new debt issues a day as of May 2019

average debt in the UK

Average Debt by Age: Does Age Count?

There are many different factors that can affect how likely you are to suffer from problems with borrowing. Most of today’s UK citizens probably believe that they’re never going to be able to clear their debts in their lifetime. Additionally, Brits might be inclined to believe that they can’t even reduce the amount they owe.

The financial issue appears to be particularly big for people between the age of 18 and 24. Because these individuals are dealing with substantial student loans, often averaging at around £46,000 in debt, they feel as though they’re starting out in life with money owed that they can never overcome. These young people between the ages of 18 and 24 might feel that they’ll never be able to get out of debt completely.

The UK’s unsecured debt is currently growing by a rate of 11%, which equates to around £80 million per day. Over the last year, the borrowing levels in the country have grown faster than any other year since 2002. Student debt, car finance, and credit cards account for more than three-quarters of the astronomical growth in unsecured lending in 2017. This often means that the people who are most likely to end up with significant debt levels are younger people.

Consumers aged between 25-34 have around five times more unsecured debt than their counterparts aged 50 and above. Additionally, these individuals are three times more likely to rely on credit cards to pay for necessities and bills.

Although young people are struggling particularly badly with money they owe, they’re not the only ones that have an issue to overcome. Renters also seem to have more financial issues to manage than homeowners with mortgages. Renters are twice as likely to have to use credit cards to pay for everyday items as homeowners with a mortgage.

UK Debt Levels Continue to Rise

Unfortunately, the UK is continuing to see a rising issue with financial problems. Over the last two years, the country’s level of personal and household debt has grown significantly, with banks and other lenders delivering record levels of unsecured loans. Experts believe that unless wage levels go up significantly, and Brits find new ways to deal with their essential expenses, the average borrowing levels will only continue to increase.

How do you measure up to the average debt in the UK for 2019? Let us know in the comment section below. Remember, if you have issues with money, reach out to the Citizens Advice for help. Don’t suffer in silence.

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