Around eight in ten UK adults will be in debt until 2021, with the most common reason for getting into debt in 2020 being ‘normal living costs’.
This is according to a study by financial comparison experts Money.co.uk. This despite the fact that the average amount owed fell by around a third compared to the previous year, according to the study.
The study also found that 2% less people will take on debt for the new year compared to the same period last year.
This means that, aside from mortgages, 78% will enter the New Year with some form of personal debt – including money owed on credit cards, personal loans, car loans, bank overdrafts and overdrafts. payday loans.
Experts say the worrisome figure is that 35% of people’s personal debt is largely due to “normal” living expenses. Another 15% say their debt is due to Christmas spending and 31% identified that their personal debt is due to a change in financial situation caused by the COVID-19 pandemic.
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The UK Adult Study was commissioned in December 2020 and shows the average UK adult ended 2020 with a total debt of £ 9,246 ($ 12,497) – down 33% from the average of 13 £ 910 from last year.
Men take on more debt in 2021 than women – British men have an average debt of £ 11,581 at the end of 2020 compared to women, who have an average debt of £ 7,016 which they will carry over into 2021.
Salman Haqqi, personal finance expert at Argent.co.uk, said: “It is worrying that so many people never move their debt to take advantage of better interest rates, which could save them hundreds of dollars a year and help them pay off their debts sooner. .
“It is always worth going online and researching your options, especially at the start of the new year, as there may be cheaper alternatives and great offers from lenders. . “
One in five Britons plan to repay their debt by consolidating the various debts they have, up 7% from 2019. But 44% of people say they are not moving their debts to take advantage of better interest rates.
According to research, some £ 2,465 of the average debt is owed on credit cards. People aged 45 to 54 have the most credit card debt (£ 3,121), while those aged 16 to 24 have the least (£ 1,640).
Geographically, people living in Northern Ireland have the most credit card debt (£ 8,323), while those in the southwest have the least (£ 1,473).
But UK adults have actually reduced the amount of debt on their credit cards by an average of £ 500 compared to the previous year, according to Argent.co.uk research.
Those who live in London are most likely to be in debt until the New Year. According to the study, 36% of people living in the Greater London area will be in debt until 2021. But the number of people across the country in debt from the previous year to this year is actually down. 10% year on year. .
The Argent.co.uk The study also shows that for 21% of people, the repayment of their debts represents 11 to 20% of their salary.
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