The average personal debt UK residents have might shock you. If you want to know what the average personal debt is in the UK, you have come to the right place.

As well as revealing the latest figures, we will explain more about the debt industry and what UK debtors can do to get their finances back on track.

What Is the Average Personal Debt (UK)?

If you search what the average personal debt is in the UK online, you are greeted with a string of articles and statistics. Most of these suggest similar figures but many of them pre-date COVID-19. Because COVID-19 has had such a significant effect on our personal finances, if you want the real answer to this question you need recent data.

The Money Charity is one of the best sources of information on this topic. They have been collecting debt data since 2005 and recently released new figures in August 2020. 

They state that the average personal debt in the UK currently stands at £3,946. This figure relates to secured debt only, such as personal loans, credit cards, unpaid household bills and much more.

Has the Average Personal UK Debt Increased?

Yes, according to the same source, personal debt has increased by £498 per adult since the fourth quarter of 2019.

This works out at more than £26 billion more debt across the UK in just 12 months. 

What Is the Average Credit Card Debt?

The overall average personal debt in the UK is more than the average credit card debt. At the time of writing, the average credit card debt is estimated between £2,250 and £2,500. 

We have written a guide on what to do if you have credit card debts in the UK.

What Is the Biggest Cause of Debt in the UK?

There are so many different stories about why people landed in debt. The most common are to do with losses of income and unexpected expenses. Sometimes it is the result of simply overspending and a lack of financial literacy. 

How Has COVID-19 Affected Personal UK Debt?

It is too early to say at the time of writing because there is not enough concrete data to analyse. However, between the months of June 2020 and August 2020, 230 individuals were made bankrupt or declare insolvent, which equates to one person around every six minutes.

It is likely that existing debt will have increased during COVID because of changes to ongoing debtors’ finances. The Guardian reports that 31% of households have lost income. The number of new debtors may not be so easy to estimate because lenders have had to be more careful about who they provided credit to.

But, How Much Are We Saving?

Not only is UK personal debt increasing, but we are also putting less away for a rainy day. The Money Charity also state that nearly 13 billion households in the UK have savings below £1,500. Some of these households have no savings at all.

This is a big concern.

Why Is This Worrying?

The reason why a lack of savings is worrying is that this is one thing that can contribute to debt problems and increase the average personal debt in the UK.

Many people get themselves into debt because they lose their job unexpectedly or have an unforeseen bigger purchase to make, such as a new washing machine or a car repair. 

With no savings to fall back on during these periods, they enter into new debt or cannot pay existing lenders the money they owe, making their debt materialise.

What Support Is Available for UK Debtors?

The numbers might be worrying and your personal debt may be keeping you awake at night, but there is help available. Here are three places to go when you have personal debt in the UK:

#1: Debt Charities

UK debt charities are free for debtors to contact and receive debt advice. Their teams will be able to help you know what the people can and can’t do when chasing money from you, but even better, they will help you identify ways to gradually get out of debt. And these solutions will stop any legal threats you might have received!

The only problem when using debt charities is that they might not offer free debt solutions themselves. Sometimes they can try to get you a Debt Management Plan, but it is rare that they can get you IVAs, DROs etc. 

#2: Debt Management Companies

If an IVA or other formal debt solution is more advantageous to you – it might save you money and wipe off as much as 85% of your debt – then you will need the help of an insolvency practitioner. These are professionals who can help arrange legally-binding debt solutions. These services cost but you can save in the long run.

Sometimes insolvency practitioners are also employed within accountancy firms and financial advice companies. 

#3: Online Forums and Websites

Another source of support and help is found on online debtor forums and free finance websites. For example, there are numerous IVA forums for people who are considering this debt solution or are already on an IVA and want help from an educated community.

We recently wrote a review on the best IVA forums for you to check out!

The Money Nerd website is also full of helpful financial information that has been simplified for everyone to understand. Our debt management company reviews are especially popular in helping people choose a reputable company to provide them with debt solutions.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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