Four in five people aren’t seeking financial advice despite debt difficulties

Debt difficulties may be a reality for the majority of households, but even this isn’t enough to stop many struggling in silence and running the risk of spiralling into persistent problem debt, according to research by Fair4All Finance, the not-for-profit financial inclusion organisation.

The research on the hidden impact of the cost-of-living crisis reveals widespread personal finance pressure points across the nation, with barriers to seeking debt advice leading many people’s debt difficulties to slip under the radar.

Polling of 1,500 adults shows debt continues to be a heavy burden, with two in three (63%) struggling with debt and almost one in six (15%) unsure if they will be able to reduce what they owe in the next 12 months.

Yet despite the everyday experience of debt, more than four in five (82%) people said they didn’t speak to anyone to get help or advice for managing money in the second half of 2023.

When it comes to seeking financial help and support, people were more likely to turn to those they know personally – 32% turned to family and 25% to friends – compared to debt advisers or council services (25%) and their bank or current account provider (19%).

Fair4All Finance’s data also shows that people are turning to new sources of support, with 18% asking their energy provider for help and advice in 2023: double the 9% seen in 2022.

Mounting pressure means people are increasingly delaying the impact of purchases and bills, with the use of credit cards (52% vs. 47%), buy now pay later (BNPL) agreements (20% vs. 15%) and arranged overdraft facilities (21% vs. 19%) all rising year-on-year.

While these products can help to stagger payments and make them more manageable, the complexities of managing multiple commitments can create a larger combined level of debt and put people at risk of falling into a cycle of financial difficulty and missing payments.

Being rejected for a loan from mainstream lenders is a key triggering factor for people to borrow from unauthorised or unlicensed lenders. Illegal money lending is especially concerning in a climate where the closure of regulated lenders has created a dangerous credit vacuum for lower-income borrowers, leaving them with fewer safe options.

A separate study by Fair4All Finance recently revealed over three million people in Great Britain may have borrowed from an illegal moneylender in the last three years.

Lauren Peel, Director of Consumer Insights at Fair4All Finance said “Keeping concerns to yourself is totally understandable, but the pathway to dealing with problem debt starts with a deceptively simple step: talking to someone about it. 

“Our findings are a stark sign of the barriers to managing debt, despite it being a daily reality for millions of people. It’s simply not sustainable to have a situation where the overwhelming majority of people are not opening up about their financial struggles, despite the strong likelihood that family, friends and colleagues are also feeling the strain.

Often people do not know where to turn for help, or are reluctant to ask for help, so struggle on in silence or, worse still, take cover by relying on illegal lenders. As the cost-of-living crisis pushes more households into debt, we need more people to know their local credit union or community finance providers can provide a helping hand, and support with debt advice to improve their financial wellbeing and resilience.”

Ian Brewer, Community Development Lead at Bradford District Credit Union, said “We have over 10,000 members and have been helping members of the community with their finances for over 30 years, so we know only too well the importance of empowering individuals to take control of their finances when it can seem that there is nowhere else to turn.

“With household budgets tighter than ever, at Bradford District Credit Union we have responded by offering co-produced community development projects with affordable financial services that help people when they need it most. Whether that is saving for school uniforms, tackling food insecurity, putting aside money for Christmas, or supporting with debt advice, we want our community to know they are not alone with their money worries. This is true across the country, and I would encourage anyone struggling with the finances to seek support from their local credit union.”