Brits are notoriously bad at talking about money.

Whether it’s being asked our annual salary or how much we’ve got saved up in the bank; it’s a big no-no. And then there are the questions around debt, credit cards and borrowing.

We surveyed 2,000 Brits to help us understand the truth behind British borrowing, attitudes to credit and the effect which this has on an individual’s personal life.

45% of those surveyed are currently in debt (excluding mortgages and student loans); that’s an estimated 24.1 million individuals across the country.

Millennials are the most likely to owe money on credit cards, loans or finance purchases, perhaps unsurprising given that those in this age group have previously been referred to as ‘generation debt’.

We wondered, though, just what comes out as the most common cause of debt?

Our findings reveal that, for almost 1 in 2, the reason behind the majority of their debt is everyday living expenses, that being that they’ve been forced into debt simply to put food on the table or keep the heating on.

Millennials are more likely than other generations to cite a car purchase as the cause of their debt and Generation X a holiday, however, it’s clear that the increasing cost of living is a widespread struggle affecting many of those across all age groups.

Many would assume that those in debt know just how much they owe, however, shockingly, 1 in 4 Brits don’t know how high this figure is.

This time, it isn’t millennials who are the least likely to know their level of debt, with 34% of those aged 45 - 54 unsure as to how much they owe on cards, loans and finance.  

I don't know how much debt I have - Where can I find out?

First, start by checking your bank statement to get an idea of the amounts you pay through direct debit towards your debts. Make a note of the company names and categorise the type of debt and its value.

You can then head to some online credit score providers, who aim to show the full extent of how much you owe. Some services may not feature your specific lender, so it's worth trying a few out to check any differences.
https://www.moneyadvisor.co.uk/debt-help/how-to-find-out-what-debts-you-have-and-how-much-money-you-owe/

Are you and your partner open about each other’s debt?

Financial problems have been cited as the most common reason for divorces, yet 1 in 4 British couples are hiding debt from their partner.

24% of respondents admitted either that their partner doesn’t know their level of debt (17%) or that they don’t know theirs (7%), with women slightly more likely to avoid debt-talk in a relationship.

Just as debt is often cited as the most common reason for divorce, similarly, our findings reveal that it’s the leading cause of arguments in over 50% of households.

Being in debt is a struggle, not just financially but also emotionally.

9 in 10 of those in debt suffer stress and anxiety as a result of the money which they owe, with 44% worrying on a daily basis. Only 12% never worry about the money which they owe.

How can I better plan my finances?

Financial planning seems like a huge task to start with. However, once everything has been broken down, you can then start to plan out future months based on essential and non-essential spending.

Online budget planners are simple, yet effective, tools to get started
budget planner

How can I improve my credit rating?

There are a number of steps you can take to improve your credit rating. It isn't a quick process, but one that can be rewarding when it comes to applying for a mortgage or loan.

Following advice from great impartial sources like how to improve your credit rating

To make steps towards improving your credit score, we recommend you look at how to access your credit profile online.

Looking across the entire population, including those who haven’t borrowed money aside from a mortgage or student loan, we found that 40% of Brits suffer from stress and anxiety because of their debt.

21% of the population (11.25 million) worry daily about the money which they owe and a further 19% (10.2 million) worry occasionally.

Millennials are the generation who worry most frequently, with more than 1 in 4 in the age group facing daily stress and anxiety as a result of debt.

How do I work out my limits when borrowing?

When borrowing through a loan, mortgage or credit agreement, you should always work out if you can afford the repayments and consider if anything in the future may impact your ability to repay the full amount. Consider consulting with your bank if you are unsure about borrowing.

Who can I contact regarding debt-related stress?

As shown by our research, debt can be a cause of stress for anyone. Impartial organisations have been set up for anyone struggling with debt.
Money Advice Service
StepChange - Leading debt charity
Citizen's Advice

Perhaps the most shocking finding, however, is that a staggering 1 in 4 Brits need to use their credit card simply to make ends meet each month.

10% are putting almost all purchases on plastic, with a further 17% needing to use their cards once they’ve run out of money each month.

Interestingly, 34% of respondents are primarily using their credit card to earn cashback, points or airmiles, demonstrating just how savvy we’re becoming as a nation.

29% of millennials, on the other hand, are using a credit card to build up a credit score, potentially setting themselves up to become homeowners.

One thing which stands out is just how many Brits need credit simply to make it to the end of the month. Almost 50% of debt is to cover everyday living expenses and 40% of the nation is suffering from stress and anxiety due to money troubles.

Sources:

2,004 Brits surveyed through Maru Usurv in October 2018
https://www.moneywise.co.uk/news/2018-01-08/money-troubles-to-cause-spike-divorces
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/july2017

https://www.comparethemarket.com/credit-cards/information/building-your-credit-score/