Consumers still paying off 2017 spending

Consumers are starting 2019 with outstanding borrowing from 2017, with 3.1 million people still paying for Christmas 2017 according to a new study by Sainsbury’s Bank Credit Cards.

The study found more than a quarter (27%) of people have debt remaining from two years ago. This New Year, UK adults still owe money from 2017 shopping (8%), holidays (8%), cars (7%) and Christmas (6%), showing it’s not just the latest festive season which is having an impact on UK household budgets.

On average people hold their debt to one credit or store card. However, a significant 28% of spenders have debts on two or more cards. For 2019, two in five (40%) people like the idea of consolidating all their debts together, but only 6% plan to take advantage of this.

Difficulty sticking to budgets is a contributing factor to people’s increasing levels of debt. Whilst many people have great intentions to budget – more than half (54%) of people set a financial plan in 2018 – only 28% managed to stick to it. In fact, nearly a quarter (24%) of people admitted going over budget last year and only 1% of the population was under their 2018 financial plan.

The card spending from 2018 that’s contributing to 2019 card balances are everyday shopping (49%), Christmas (41%) and holidays (30%).  Despite this, only 25% of people intend to set themselves a spending budget for 2019.

Borrowers believe it will take 12 months on average to clear their balance.  One in 10 (12%) of those with outstanding debts think it will take longer than a year to get back into the black, indicating that Christmas 2019 may be an outlay well into 2020.

Financial expert and editor and founder of Moneymagpie.com, Jasmine Birtles, said “It’s hard to say ‘New Year, New You’ when you have debts hanging over from 2017. But it really is possible to make serious dents in big debts, even to pay them off completely, if you take an all-round approach.

“Firstly get some help, whether it’s a friend or relative to help you understand how much you owe, or professional help from a debt charity. Then look at ways to both cut down on daily spending and increase your income. There are lots of ways to make a bit of extra cash on the side to help turbo-charge your debt-repayments from selling items online, taking part in focus groups or mystery shopping. The faster debts are paid off, the cheaper these will be in the long-run so it’s worth doing whatever it takes now.”