Households spending average of £259 per month on unsecured debt

Latest data from Hargreaves Lansdown has found that households with unsecured debts (like credit cards and loans) spend an average of £259 a month on them.

Bank of England showed that the annual growth rate for all consumer credit was 8.1% and for credit cards it was 12.1% – the highest since January 2024. In debt hotspots, 16% of income is being spent on repaying unsecured debts.. In the most debt-laden area of the country, those with debts owe an average of £4,623 – compared to £1,675 in the areas with the lowest debts.

The data found a pattern that the more people earnt, the more they owe, with households containing the top fifth of earners have average monthly debt repayments of £415 (excluding the mortgage), while the lowest fifth have £73.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, said “Debt becomes more of a pressing issue for millions of people at this time of year. The UK already borrows hundreds of billions of pounds, but the extra cost of Christmas can tip the balance, so debts become a major concern and repayments take a horrible toll.

“These debts aren’t held equally. Partly because it’s easier to borrow when you’re on a higher income, and partly because those on higher incomes are more confident they can afford repayments, the Barometer shows that the more people earn, the more they tend to borrow. Those on lower incomes will tend to fall behind on bills rather than running up major consumer credit debts. It’s why the debt hotspots, with the most monumental piles of debts, include well-off areas in the South West. It’s also why those with the smallest consumer credit debts are in the North East, and parts of Wales, where for many, money is tighter.”

“For a clearer picture of those areas where debts are more of a strain, we can look at the percentage of people’s income which goes on debt repayments. This reveals some debt hotspots. There are several within commuting distance of London. Here, pay is higher than the national average, but outgoings are also high in the commuter belt, and as a result, consumer debt repayments make up an eye-watering proportion of income.

“Those at the very top of the income tree may well buck the trend, because their incomes are so high that it’s hard to spend it all – let alone run up debts. It’s one reason why debt repayments are a smaller proportion of income in incredibly wealthy areas – like Kensington and Chelsea, and Westminster, where repayments make up an average of 7% of income. However, this is followed fairly swiftly by areas where incomes tend to be lower – including Newcastle Upon Tyne, Hackney and Middlesbrough, who are spending 9% of their income on repayments. In many cases, this owes something to those on lower incomes not being able to borrow significant amounts of money.”