The average Brit’s debt broken down

Mike Page's picture
Authored by Mike Page
Posted: Tuesday, April 30, 2019 - 11:16

It will come as no surprise to most that the UK finds itself in the midst of a debt problem, but things may be worse than suspected. New levels of debt are being recorded in a number of areas as Britain faces a lending crisis.

Personal financial awareness is more important than ever, with individuals being encouraged to carefully manage their finances in order to avoid becoming part of growing statistics.

So, where does Britain’s debt currently stand on an individual level?

A new peak

Moving into the new year, British household debt hit a record peak, with the average UK home facing £15,385 of money owed to banks, credit card firms and other lenders.

The personal debt amount has skyrocketed in the last five or so years. In 2014, the average figure sat at around the £10,500 mark, meaning the UK has experienced a near 50% increase in personal debt over the last half decade. In the five years prior to 2014, debt levels stayed relatively steady at around the £10,000-£11,000 mark.

Years of public spending cuts alongside static wages have been blamed for increased borrowing, with the current collective debt of £428 billion far outweighing the £286 billion peak prior to the financial crisis of 2008.

Credit card troubles

Credit card lending appears to be one of the county’s bigger issues, with a combined £72.5 billion of credit card debt announced at the turn of the year, equating to £2,688 of unpaid credit per household.

For low-income families teetering on the poverty line, well-advertised and easily accessible credit cards provide a short-term solution to immediate debt problems, but, if not managed correctly, this growing debt can pave the way for more significant troubles in the future.

In its mid-2018 research, the debt charity Step Change found an increasing proportion of its clients hampered with short-term, high-cost credit, with 18.3% of its new applicants struggling with such debt.

The charity also noted a rise in energy bill arrears (13.1% of new clients) and nearly a third of new clients were behind on their council tax payments.

Personal loans by area

Typically, areas with the largest populations will carry the highest level of personal loans. However, consumer website Finder developed a breakdown of loan debt per capita in the UK for the current month, with some surprising areas listed in the top 10.

Currently top of the pile is Northampton, with outstanding balances of £485.7 million equating to £753 per capita. Salisbury finishes a close second with £750 per capita, with Reading rounding out the undesired podium on £744 per head.

Regionally speaking, London leads the pack in personal loan debt, with a total of £6 billion outstanding. The south east takes second on £5.7 billion, with north-west England following behind. At the other end of the table, the north east boasts the smallest amount of debt at just under £1.6 billion.

With household debt at a record high and credit card, loan and utility arrears increasing, it would appear the UK has a spiralling debt problem that it needs to get under control.

Better debt advice, credit card awareness and structured finance planning will go a long way to help households, but problems are set to continue as long as Britain languishes in a state of austerity and low minimum wage.

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