Credit, Collections & Insolvency News
New ONS data on debt and wellbeing has found that more than a fifth of adults in the UK (22%, equal to around 11.5 million people) reported borrowing more money or using more credit than the previous year because of the increased cost of living.
Nearly a third (31%) said they would be unable to afford an unexpected expense, and those borrowing more were more likely to report a high anxiety score.
The research also found that more than one in ten (12%) adults responsible for paying energy bills reported finding it ‘very difficult’ to afford their energy bills. Of those who found paying energy bills “very difficult”, 51% reported high levels of anxiety. This compares with 22% of those who found affording these bills ‘very easy.’
Most recently, 6% of adults reported being behind on their gas or electricity bill payments. Half of this group (49%) reported high levels of anxiety, compared with only 33% of those who were not in arrears. Overall levels of life satisfaction were lower among those behind on their bills, too, with 28% reporting low life satisfaction, compared with only 9% of those who were not in arrears.
Affording rent or mortgage payments was ‘very difficult’ for 7% of adults who pay them. Of this group, half (51%) reported high levels of anxiety, compared with 29% of those who found it “very easy” to afford rent or mortgage payments.
Adults who reported borrowing more money or using more credit than usual, were twice as likely to report a low levels of happiness as those who had not done so (22% compared with 11%). They were also more likely to report high levels of anxiety compared with those who were not borrowing more: 35% compared with 31%.
Commenting on the findings, Emma Steeley, CEO at Freedom Finance said “The cost of living crisis has undoubtedly placed a significant strain on millions of people’s household budgets this winter. With more than three in 10 people saying that they would be unable to afford an unexpected expense, it is evident that many are in a precarious financial situation.”
“Rising interest rates have also made borrowing more expensive with credit card rates at their highest level since before the millennium while personal loans are also at multi-year highs. With the era of cheap money disappearing, the importance of consumers making good financial decisions is increasingly important.”
“For consumers looking to take out a credit product like a personal loan, our message is simple: use all the technologies and tools at your disposal to shop around and secure a deal that suits your personal circumstances.”
