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New November data already shows worrying trends reflecting cost of living - even before Christmas pressures

4 January, 2022

Today’s Bank of England data for November showed a significant net increase in borrowing on credit cards, which StepChange Debt Charity warns may be an indicator of increasing underlying financial stress among some households.

Credit cards remain the most common type of unsecured debt held by new StepChange clients at the time they take advice. In November, two thirds (66%) of new clients had at least one credit card debt.

Research for the charity before Christmas also suggested that credit cards would be the most common form of borrowing used by people who expected to have to borrow to afford the cost of Christmas. At the same time, with the rising cost of living creating financial problems for an increasing number of households, there is a risk that people will increasingly be turning to credit cards to meet essential spending needs, such as groceries.

StepChange’s own analysis of the characteristics of the 13,000 clients who took debt advice from the charity in November shows that:

  • More than one third of clients (35%) were in receipt of Universal Credit in November; the highest proportion of new clients in the previous six months
  • The proportion of clients in council tax arrears has increased; in November, two in five (40%) new clients were behind on their council tax bills
  • The proportion of clients with rent arrears (25%) and mortgage arrears (19%) had also increased between October and November
  • The proportion of clients in energy arrears is substantially higher than before the pandemic. In 2019, 13% of new clients were behind on gas bills (22% in November 2021), and 17% of clients were behind on electricity bills (27% in November 2021).
  • A growing proportion of single parents received debt advice in November. One quarter (25%) of new clients were single parents.

Richard Lane, Director of External Affairs at StepChange Debt Charity, said:

"Even in November, before the main Christmas spending period, the rise in credit card borrowing is likely to be reflecting an element of financial pressure among some households. We know that a typical household coping strategy is to turn to credit to help meet the costs of basic essentials during a worrying period of sharp rises in the cost of living. Since this November data, the pressures have worsened so it is vital that policymakers are thinking ahead to help mitigate the risk of a rising debt crisis in 2022."

Notes to Editors

  1. StepChange’s latest client data can be found here
  2. The Bank of England’s Money and Credit data can be found here

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