According to Fair 4 All Finance, 20.3 million people live in financially vulnerable circumstances, with 2.7 million falling into difficulties.
Meanwhile, figures from The Money Charity show that the average credit card debt per household is £2,528, and UK Finance has reported that balances on credit cards have grown by 5.6% year-on-year.
Top tips to become debt-free
Credit reporting and personal finance website TotallyMoney has put together the following tips to help people get out of debt.
Go through your bank statements and set a budget
Alastair Douglas, CEO of TotallyMoney, said: “The first step can often be the hardest, and going through your bank statements and paperwork is never going to be very fun.
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“But in doing so, you can get a better understanding of how much you owe, who you owe it to, and how much you have left to pay. From there, you can work out your priority debts, how much you have left over each month, and set a budget to help you get debt-free.”
Check your regular payments
It’s worth going through your monthly expenses to see where you can save money. That might mean cancelling unnecessary subscriptions, cutting costs on your shopping, or searching for better deals on household bills.
By texting ‘INFO’ to 85075 on your mobile, you can find out if you’re out of contract and free to switch to a cheaper provider. According to TotallyMoney, about a third of people are out of contract and could save around £70 per year by changing switching providers or tariffs.
You could also save money on insurance, energy and broadband – and with many providers hiking prices in April, now could be the perfect time to do so.
Check your credit report
Douglas said: “Checking your credit report can help you ‘mop up’ the details of any other money you owe. You can also check that all the information is correct and up to date and raise a dispute if you spot something [that] doesn’t look right.
“A good credit report provider should show you what’s holding you back, and give you a personalised plan to help you move forward. Some will also let you connect a bank account to their app using open banking, and show you which payments might impact your credit score. Just remember that you should never pay for your credit report – it’s your data, and is always available for you to check for free.”
Consolidate debts
It can be tricky to juggle multiple debts such as cards, loans, and buy now, pay later (BNPL) agreements. Each will have different payment dates, interest rates, and total amounts.
One way to make things easier is to combine them all into one, single monthly payment. You could also lock in a lower interest rate, save money, and get out of debt quicker. Just do your calculations first to make sure it’s the best option for you.
Seek free and independent debt advice
If you’re still struggling with debt, then you can seek free, confidential and independent advice from organisations such as Money Wellness, Citizens Advice, and StepChange. They’ll be able to offer you help with budgeting and money-saving solutions.
