Third of people have poor or very poor debt resilience

A third of people have poor or very poor debt resilience according to new analysis by HL Savings & Resilience Barometer.

The research also found that higher earners are more likely to score poorly for debt resilience than lower earners. 38% of those in the fourth quintile (who earn more than three fifths of the population) have poor or very poor resilience.

However, some vulnerable groups also score poorly, including single parents and those who say they’re always running out of money before the end of the month.

Commenting on the figures, Sarah Coles, Senior Personal Finance Analys at Hargreaves Lansdown said  “Dangerous debts are on the rise. After more than a year of desperately trying to keep up with runaway prices, millions of us are running out of road. The HL Savings & Resilience Barometer reveals that debt is becoming a serious threat, and while higher earners tend to carry a bigger debt burden, lower earners are struggling too.”

“Typically, the lion’s share of debt is owed by wealthier people, who tend to borrow more. They may feel more comfortable owing more money, because they’re confident their income will cover the cost. However, even those with plenty of wiggle room in their budgets shouldn’t be too keen to take out more credit, because the last few years has revealed just how easy it is to be caught out by the unexpected.”

“Overall, a third of people score poor or very poor for debt resilience, and while it peaks at 38% for those in the fourth quintile (who earn more than three fifths of the country), it’s still 32% among the second and third quintiles (who only make more than the bottom fifth of earners). This group are less likely to be borrowing because they feel on top of their ability to repay – and more likely to borrow because they don’t feel they have any other choice.”

“Some vulnerable groups in particular have worryingly poor scores, with 37% of single parents suffering poor or very poor debt resilience, along with 47% of those who say they are always running out of money before the end of the month. And while debt feels like the answer to our problems in the short term, it creates huge issues of its own. The struggle to make ends meet becomes even harder when you have interest and debt repayments to worry about on top of everything else.”

“Those on the lowest incomes, and people who have borrowed to the hilt, are likely to find it more difficult to get credit cards or loans. Bank of England statistics show that banks are increasingly wary about lending at the moment, because they’re concerned tougher times ahead will force more people to miss payments.”