Consumer debt rose by a third in 2022
UK consumer debt rose by a third in 2022, and four in five adults entered 2023 in debt, new research has found.
The rising cost of living and higher bills have been named as the key drivers in consumer debt, with the average adult’s debt rising by £8,687 last year. This has forced many Brits to take out a personal loan or credit line in order to make ends meet.
According to the money.co.uk debt index, almost half (46 per cent) of all 25-34 year olds have taken out an additional credit card or loan to cover the increasing cost of living.
32 per cent of UK adults carried credit card debt into the new year, while 16 per cent relied on personal loans and overdrafts.
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One in five (19 per cent) of adults’ debts are from the last one to six months, while another one in five (19 per cent) are from one to two years ago, suggesting an influx of debt caused by the cost of living crisis and the Covid pandemic.
“Between soaring energy bills and volatile mortgage rates, 2022 has been an unstable economic year for the UK,” said James Andrews, personal finance expert at money.co.uk.
“Bills, like energy and water, have had the biggest financial impact this year. More than half (53 per cent) of those who have seen their debts increase thanks to the cost-of-living crisis feel that they would be debt free if not for costlier bills.
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“Living expenses such as groceries were the second most impactful expense, affecting 48 per cent of those whose debts are a result of the cost of living.”
47 per cent of those surveyed by money.co.uk said that they were allocating monthly income to help pay off their debts, while another 14 per cent said that they plan to consolidate their debts to make repayments more affordable.
Two thirds (66 per cent) of 16-24 year olds have transferred their debts in order to take advantage of better interest rates.
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