LONDON, December 31, 2019 / PRNewswire / – More than half of the adult population in the UK (almost 27 million), will start debt in 2020, with almost five million** owed more than £ 10,000 in loans and credits, according to a poll conducted by money.co.uk.
The financial comparison website surveyed 2,018 people in the UK aged 16-64, and found that, excluding mortgages, nearly two-thirds of (63%) Enter the New Year with some form of personal debt – including money on credit cards, personal loans, car loans, overdrafts, and payday loans.
Of the 42.7 million people aged between 16 and 64 in the UK *, 26.9 million people may be entering the New Year in debt, by as much as £ 100,000.
The poll also found that a third (33%) of respondents have a personal debt of between £ 2,000 and £ 10,000; that is nine million people. While almost a fifth (18%) said their personal debt exceeded £ 10,000, which equates to 4.8 million adults in the UK have been saddled with this debt burden.
More than a quarter (26%) of those surveyed, from the North West, said they will enter 2020 with a personal debt of between £ 5,000 and £ 10,000, while more than a fifth (21%) of the respondents Wales said 2020 will start with debts between £ 10,000 and £ 50,000.
Meanwhile, almost half of the Scots are (45%) will not enter the new year with any debt. This is comparable to normal 30% of Londoners to be debt-free in early 2020.
Visit www.money.co.uk/content/debt to view the interactive UK Debt Map.
Types of personal debt
More than a third (38%) of respondents said they have credit card debt, 19% personal loan, 19% overdraft, 12% car loan and 6% payday loan.
The average credit card debt of the respondents is £ 2,966, with men (£ 3,138) owed more than £ 300 more than women (£ 2,793). Respondents between the ages of 35 and 44 have an average debt of £ 4,076 vs £ 1,784 for 16-24 year olds.
Half (50%) of 35-44 year olds owe money on plastic, against just over one in five (23%) 16 to 24 year olds.
Almost three quarters of a quarter (74%) of credit card respondents said they do not pay off the balance in full every month, while a fifth said (22%) make the minimum payment or less.
Causes of Debt
Asked what their debt was due to, four out of ten (40%) declared normal cost of living, 21% said debt consolidation, 19% attributed their debt to holidays, 18% toward paying for Christmas, 18% because of spending on luxury items, 12% paying off debts accrued from past Christmas expenses and 10% to help others out of debt.
Salman Haqqi, personal finance expert at money.co.uk, remarks:
“It is sobering to think that nearly 27 million people heading into 2020 are saddled with thousands of pounds of personal debt – a number that will not diminish anytime soon.
It’s alarming to see nearly half of people never shift their debt to take advantage of better interest rates, something that could save them hundreds of pounds a year and help them pay off their debts faster. 0% – wire transfer cards are a good way to manage debt because they take the extra interest burden off your monthly payments.
“One of the most disturbing statistics from the survey is that 40% of people use debt to pay for household necessities because they simply cannot afford the cost of living with their regular income.
“More than four million people have an average of between £ 10,000 and £ 50,000 in personal debt, which is a huge burden to bear, especially when circumstances change and they find themselves out of work.
“It is always worth going online and researching what options are available to you, especially as the new year begins, as there may be cheaper alternatives and a strong supply of lenders.”
Growing and paying off debts
Almost half (46%) of respondents said they have built up a personal debt over a number of years and think it will take an average of three years to pay it off. While, 34% said it had been built up over the past 12 months.
People have an average of two and a half years in debt, but a fifth owe the money for four years or more. 1.3 million people (5%) have been in debt for seven years or more.
One in six (16%) of those surveyed believe it will take seven years or more to pay off their debts, and 8% admit they don’t know when they will pay off their debts.
According to the poll, people allocate nearly a quarter (22%) of their monthly wages to pay off their debts. Two-thirds (67%) try to pay off their debt themselves, 13% try to solve their problems by consolidating debt in one place to make repayments more affordable while 15% have borrowed from their partner and / or family members.
Respondents say they are saving £ 190 on average every month, but just under a third (31%) say they can only save £ 50 or less.
For those struggling with debt, Citizen’s advice has specialized money advisers, while other organizations who can help, include StepChange, Schuldadvies Foundation, National indebtedness and Shelter.
Notes to Editors:
Money.co.uk surveyed 2018 UK residents, aged between 16 and 64, during November 2019.
* According to the latest employment figures (July to September 2019) of the ONS are there 32.75m people aged 16 and older, employed, 1.31 m unemployed people, and 8.62 m economically inactive. That is 42.68m of working age.
Take 42.68m as the number of people aged 16-64. If 63% of respondents aged 16-64 enter 2020 with some form of debt, that is 0.63 *42.68m = 26.9 million will go into debt in 2020.
** According to poll, 18% of respondents have personal debts between £ 10,000 and £ 100,000. That means 18% of 26.9 million = 4.8 million people.