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23rd January 2017
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The UK’s Christmas debt hangover

Record Number of Brits Seek Debt Advice

Record numbers of Britons sought advice to tackle mounting debts as more households are ‘struggling to keep their heads above water’, according to debt advice charity StepChange.

Pre-Christmas debt figures suggest that more of us Brits are taking on unsustainable levels of debt which may mean tough times lie ahead for many.

The latest debt figures released by the Bank of England show that unsecured credit, including credit cards, car loans and second mortgages, grew by nearly 11% to £192.2bn in the year to November 2016.

Taking into account pre-Christmas shopping days like “Black Friday” and “Cyber Monday” November saw the sharpest month by month increase in debt for 11 years.

With debt levels now approaching “2008 financial crash” levels, debt charities and other organisations have issued warnings about debt.

The National Debtline note that they are anticipating their busiest January in years.

The Trade Union Congress (TUC) report that average household debt (including student loan debt), is higher now than it has ever been clocking in at just shy of £13,000.

The TUC also note that unsecured debt as a percentage of household income was at its highest for eight years. They blamed weak wage growth for leaving more families dependent on borrowing.

StepChange, the debt charity, warned that rapid increases in debt such as those seen in the pre-Christmas shopping period could leave thousands of families vulnerable to inflation, interest rate changes and other changes in financial circumstance such as unemployment or divorce.

The charity’s Head of Policy commented that “Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship.”

Christmas is always a tricky time for families that struggle with debt issues.

Research conducted for National Debtline by YouGov found that one in three British adults bought Christmas food or presents on credit this year.

Credit cards are one of the biggest culprits in this sense. At £66.7bn, credit card debts make up more than a third of the total debt identified by the Bank of England. In November, this figure was up £600m from the previous month.

Umbrella’s Insolvency Manager Thomas Fox believes the situation isn’t too serious at the moment for many families due to low interest rates but nonetheless they should exercise caution.

He said: “Most families will be able to cope with an increase in Christmas debt but borrowers should be aware that a change in circumstance could be just around the corner. These things have a habit of coming out the blue and can quickly make debts unmanageable especially if the increased inflationary pressures we are currently seeing result in interest rate rises.

“If you are struggling with debt then the important thing to remember is that there are options. Umbrella’s IVA service can make repayments more manageable and stop creditor hassle. We will ensure that you receive the best possible advice with regards to your financial position.”

For FREE confidential debt advice now call 0800 611 8888