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Unsecured debt at highest level in a decade

Unsecured debt at highest level in a decade
Paloma Kubiak
Written By:
Paloma Kubiak

The average amount of unsecured debt has reached its highest level since 2013, while household arrears have also risen substantially, a charity warns.

Higher amounts of credit card and personal loan debts have driven unsecured debt to stand at an average of £14,654 in 2023.

This is up from £13,563 in 2022, according to charity StepChange. The average amount of household arrears among StepChange clients has also soared, from £2,833 in 2022 to £3,124 in 2023.

Overall, the charity said full debt advice was completed every three minutes in 2023, as it helped 183,403 clients. This is a 10% increase year-on-year.

The charity said it continues to see a high number of women seeking debt advice (over three in five clients), with those aged between 25 and 44 making up the majority of its base. It added that renting is the most common housing tenure among clients (64%).

As essential bills have risen, the average monthly amount available to repay debt has fallen by 23% from £69 in 2022 to £53 in 2023.

Indeed, cost-of-living pressures have been cited as the most common reason for debt (one in four) and the proportion of clients in receipt of Universal Credit (37%) has risen by three percentage points over the year.

‘Household financial insecurity is a growing threat’

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 left over 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.”

Brownridge added that, as we head closer to a general election, it’s urging this Government and the next “to really focus on building financial resilience among households”.

She added: “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.”