Unsecured debt at its highest level for a decade

27th March 2024

Latest analysis by StepChange Debt Charity has revealed that there is growing financial insecurity among its clients, with the average person coming to the charity for help having more debt and less money to pay towards it each month.

The findings also showed that the average amount of unsecured debt has reached its highest level since 2013, standing at £14,654 in 2023, up from £13,563 in 2022. This rise has mainly been driven by higher amounts of credit card and personal loan debts.

On average, one new client completed full debt advice every three minutes in 2023 with clients seeing their average monthly amount available for debt repayment (surplus) fall by 23% from £69 in 2022 to £53 in 2023, also one third (32%) of clients were in a negative budget.

In 2023 the charity provided full debt advice to 183,403 clients, which is an increase of 10% year-on-year. Cost of living pressures became the most common reason for debt, cited by one in four (25%) clients.

With the cost of essential bills rising rapidly over the course of both 2022 and 2023, the average amount of household arrears among StepChange clients has gone up substantially – rising to £3,124 in 2023, up from £2,833 in 2022.

However, while both household arrears and unsecured debt amounts have risen, the proportion of clients with these debt types has remained largely unchanged, indicating the more severe impact that the cost of living crisis is having on certain cohorts of clients.

The charity continues to see a high number of women seeking debt advice, with over three in five (63%) of all new clients being women. Clients aged between 25-44 are vastly overrepresented, making up 60% of the client base, compared to one third (33%) of UK adults.

The proportion of clients in receipt of Universal Credit (37%) has risen by three percentage points in 2023 when compared to 2022, and StepChange continues to see renting as the most common housing tenure among clients (64%).

Vikki Brownridge, Chief Executive at StepChange Debt Charity, said “Over the past year we’ve really begun to see the impact of the cost of living crisis take hold. Particularly among those on low incomes, household financial insecurity is a growing threat. Both a rise in household arrears and unsecured debt amounts suggests those struggling are turning to credit to cover their essentials more than ever.

“With the amount of money our clients have leftover each month after covering the basics becoming more stretched, it’s a real concern that people don’t have the safety nets to fall back on if they’re faced with a shock that impacts their finances like ill health or redundancy.

“As we edge ever closer to a General Election, we’re urging this government and the next to really focus on building financial resilience among households. Measures like social tariffs for essential utilities, a robust and adequate benefit system and a commitment to building low-income savings, would make a real difference to the lives of those struggling day in and day out just to get by.”