Double Bubble Toil & Credit Trouble – UK’s increasing unsecured credit bubble!

Adrian Wooldridge

With the Financial Conduct Authority and recent press reporting concern about the UK’s increasing unsecured credit bubble, we thought we would ask the public about their debts and if they plan to increase their unsecured debt over the next 6 months.

Recent press* has reported around 50% of the UK working population having less than £100 in accessible savings accounts and more than 17m people who do not pay off their monthly balance on their credit cards. Couple this with the amount being borrowed to buy new cars trebling in 8 years to more than £30 billion a year and demand for unsecured personal loans ticking up – could we be on the cusp of another credit crash?


Finances deteriorating, unsecured debt increasing

Whilst our research found that over half (57%) are at least quite confident in the future of the UK, this positivity is diminished somewhat when we consider that only 21% feel UK economic conditions have improved since the EU referendum, compared to 36% that feel they have got worse (a net negative figure of -15%). This ratio was echoed when we asked if their own personal financial situation had improved (12%) or got worse (26%) – a net negative of -14. Overall, the feeling is that things have declined slightly.

Moving on to the outstanding unsecured debt within the UK, our findings show 36% of the UK population do not have any debt but 64% of people do. The most prevalent debt is on credit cards (38%), presumably because it is the most accessible, flexible and easy to roll over from lender to lender.

Of those with unsecured debt (with outstanding balances on credit cards, store cards, overdrafts, personal loans and/or car finance), 28% have increased their overall outstanding balance over the last 6 months, whilst 25% have decreased it – thus demonstrating a slight net increase in debt overall and thereby concurring with recent reports that unsecured debt is increasing. However, when we asked about plans over the next 6 months, only 12% claim they will increase their debt, with a substantial 46% of people expecting their debt to decrease; are they being realistic?

It seems that what is actually happening and what people are planning is very different. We then asked those that expected their debt to increase if they felt comfortable / in control with this a massive 62% said they weren’t! Two in three of these people (66%) say they will spend the additional borrowings on “everyday spending and bills,” which does not sound like people comfortable with borrowing to improve their quality of life – to me this is distress borrowing and extremely concerning.


Intention “v” reality – the debt pay back

The disconnect between reality and an individual’s intentions is further shown when we asked if people were confident in paying off their credit and over three in four (78%) of the population who have debt said they were at least quite confident, and the same proportion (78%) felt that they would pay their debt off within 3 years. 21% felt it would take longer, and only 1% felt they would never pay off their debt!

This might be the case if all unsecured debt was on a structured repayment of 36 months but it’s not; even unsecured personal loans can be taken over 5 years or more and, as we know, credit card debt can take up to 17 years to pay off if paying the minimum balance!

I think peoples’ expectations of paying off their credit is unrealistic, especially when combined with their annual pay increases not keeping up with cost of living rises and increasing inflation putting more pressure on the family’s ability to repay their credit. I suppose the only bright spot (and it is a dim one) is at least if inflation is increasing, it is in real terms reducing the debt outstanding – however, this is nominal in a period of low-ish inflation.


Majority saving something!

So, with the UK struggling to repay their unsecured debt, are they managing to save anything? We asked all respondents if they have saved any money in the last 6 months and 28% of people said no – they have not put money into savings, investments or a pension, which shows that people are spending what they are earning. We do not know, however, if this is because they cannot save or are just spending all that they have as the interest rates are so low and inflation means there is a perception that there is no real return on money that is saved.

The positive aspect is that although unsecured debt is increasing, 72% of the UK population are managing to save something, be it into pensions, savings accounts or other – but is it enough? I think we will leave this question for now!



*Mail Online article: quotes 16m working Britons have less than £100 held on accessible savings accounts

The Office for National Statistics (ONS) UK labour market: Feb 2017 states that there are 31.8 million people in work (full-time and part-time) in the UK.



All research data cited was collected using our Harris 24 survey tool that allows you to ask between 1 and up to 25 questions to the UK population and get answers back within 24 hours. In this survey, conducted on 28th April 2017, we collected 706 UK general population responses within 2 hours and used our automated online reporting tool to view and analyse responses. If you have any burning questions you would like to ask and get the answers quickly, efficiently and cost effectively please contact me or click here to learn more about Harris 24.


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