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Five million adults in UK owe £10,000 plus

The average credit card debt of those polled is £2,966, with men (£3,138) owing over £300 more than women (£2,793). Respondents aged between 35 and 44 years have an average debt of £4,076 vs £1,784 for 16-24 year olds.

More than half of the UK adult population (almost 27 million), will head into 2020 in debt, with almost five million owing over £10,000 in loans and credit,

The financial comparison website money.co.uk polled 2,018 people living in the UK, aged 16-64 years, and found that, not including mortgages, almost two thirds (63%) will go into the New Year with some form of personal debt – including money owed on credit cards, personal loans, car loans, bank overdrafts and payday loans.

Extrapolating these figures, of the 42.7million people aged between 16 and 64 in the UK*, 26.9 million people are potentially heading into the New Year in debt, by as much as £100,000.

The poll also revealed that a third (33%) of respondents have a personal debt between £2,000 and £10,000; that’s nine million people. While, almost a fifth (18%) said their personal debt was above £10,000, which equates to 4.8 million adults in the UK saddled with this level of debt.

More than a quarter (26%) of those polled, from the North West, said they will go into 2020 with a personal debt between £5,000 and £10,000, while more than a fifth (21%) of respondents from Wales said 2020 will kick off with debts between £10,000 and £50,000.

Meanwhile, almost half of Scots (45%) won’t enter the New Year with any debt. This compares to just 30% of Londoners being debt-free at the start of 2020.

Types of personal debt
More than a third (38%) of those polled said they have credit card debt, 19% personal loan, 19% bank overdraft, 12% car loan and 6% payday loan.

The average credit card debt of those polled is £2,966, with men (£3,138) owing over £300 more than women (£2,793). Respondents aged between 35 and 44 years have an average debt of £4,076 vs £1,784 for 16-24 year olds.

Half (50%) of 35 to 44-year-olds owe money on plastic, compared to just over one in five (23%) 16 to 24-year-olds. Almost three quarters quarter (74%) of those polled with credit cards said they do not pay off the full balance every month, while a fifth (22%) make the minimum payment or less.

Causes of debt

Asked what their debt was due to, four-in-ten (40%) stated normal living expenses, 21% said debt consolidation, 19% attributed their debt to holidays, 18% towards paying for Christmas, 18% due to spending on luxury items, 12% paying off debt accrued from previous Christmas spending and 10% on helping others out of debt. Salman Haqqi, personal finance expert at money.co.uk, comments: “It’s sobering to think that almost 27 million people will be heading into 2020 saddled with thousands of pounds of personal debt – a number that shows no sign of diminishing any time soon.

“It’s alarming to see that almost half of people never move their debt around to take advantage of better interest rates, something that could save them hundreds of pounds a year and help them pay off their debts sooner. 0% balance transfer cards are a good way to manage debt as they remove the added pressure of interest from your monthly payments.

“One of the most concerning stats from the research is that 40% of people are using debt to pay for household essentials, simply unable to afford the cost of living from their regular income.

“Over four million people have between £10,000 and £50,000 of personal debt on average, which is a huge burden to bear, especially if circumstances change and they find themselves out of a job.

“It’s always worth going online and investigating what options are available to you, especially as the new year starts, as there may be cheaper alternatives and strong offer from lenders.”

Paying off debt

Almost half (46%) of respondents said that they have built up a personal debt over a number of years and believe that it will take on average three years to pay it off. While, 34% said it had accrued over the past 12 months.

On average, people have been in debt for two years and a half years, but a fifth have owed the money for four years or more. 1.3 million people (5%) have had their debt for seven years or more.

One in six (16%) of those polled believe it will take seven years or more to pay off their debts, and 8% admit they don’t know when they’ll pay off their debts.

According to the poll, people allocate almost a quarter (22%) of their monthly wages, on average, to paying off debt. Two-thirds (67%) are trying to pay off their debt on their own, 13% are attempting to solve their problems by consolidating debts into one place to make repayments more affordable, while 15% have borrowed from their partner and/or family members.

 

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