Almost 40 million UK consumers will remain in the red this year as unsecured debt hits £240bn

Mark Dorman

A third of Britons now rely on some form of credit to get through each month, with UK consumer debt hitting £240 billion.

The average amount owed per adult is £6,372, up 5% from this time last year. Londoners owe the most in the UK, racking up an average of £10,244.

Younger spenders accumulate more debt than their older counterparts, as almost a fifth (18%) of 18-34 year olds owe more than £10,000, compared to just 5% of over 54 year olds.

The figures, compiled by MoneySuperMarket, do not include mortgages – rather the debts are made up of bank overdrafts, personal loans or credit cards.

Over a third (35%) of those who have more debt than they had last year blame the rising cost of living, including transport, bills and groceries. However, three in 10 (30%) admit they are guilty of spending too much on luxury items, while a tenth (8%) say they cannot control their spending.

Those in debt have been so for two years on average and almost half (43%) have increased their debt by up to £1,500, or they haven’t cleared any of it over the last 12 months.

Alarmingly, 5% cannot see themselves ever getting out of debt, meaning 37.6 million households will remain in the red this year.

Dealing with debt: UK consumers are facing a £240 billion debt mountain (Getty)

Kevin Pratt, consumer affairs expert at MoneySuperMarket, highlighted the squeeze on household budgets as inflation rose to a 32-month high last month, 1.8%, and that it was predicted to hit 2.4% later this year.

“That means people in debt will find it harder to get back into the black,” he said.

“However, there are some simple steps people in debt can take to make sure they’ve got the best possible chance of paying it off. For example, it’s important to shop around to make sure you’re paying the lowest interest rate you can.”

Looking ahead, only 6% are planning to take on more debt, while a third will try to clear it. However, one in 10 admit they find it difficult to live within their means, so they will use credit to get by.

This increases for men, as 11% struggle with budgeting, compared to 7% of women in the red who find this is a problem.

Taking action to get back into the black:

  • 30% pay off their debt in full each month
  • 29% pay off what they can each month and are trying to clear their debt as quickly as possible
  • 27% are building and sticking to a monthly budget
  • 16% are going without luxury purchases
  • 14% have set up a standing order to clear debt automatically
  • 10% have stopped going out for meals and other forms of entertainment

Pratt said, with interest rates at historic lows, people could consider multiple debts into a low-interest personal loan, or shifting credit card balances to 0% balance transfer options.

“What matters most is that you take a proactive approach to debt, to see if you can reduce the interest you pay and make inroads into what you owe,” he added.

“With the UK facing an uncertain economic future, households should be taking whatever steps they can to get their finances into the best shape possible.”

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