UK Households Break Debt Repayment Records
During April, British households repaid around £7.4bn worth of personal loan and credit card debt. That’s the highest level since records began in 1993.
During April, British households repaid around £7.4bn worth of personal loan and credit card debt. That’s the highest level since records began in 1993. To put this into perspective, during a normal month, households typically repay about £300million on their credit cards. Over April, this figure increased to a huge £5bn.
Consumers not spending as they usually would
One spokesperson for a personal finance website commented on the findings, stating:
“You often hear how people are reckless with credit, well this is the polar opposite.
“It’s the level of caution and good financial common sense of people paying down debt which I find encouraging… it’s good that people are making efforts to reduce debt now…”
With experts predicting troubling times for the economy, with a possible recession on the horizon, this news is certainly promising. Should markets react poorly over the next few months, people owing less to their creditors – and having more disposable income as a result – may have an effective safety net.
The reasons for this high debt repayment seem to be consumers not spending as they usually would do on retail or leisure activities. Funds which would be diverted here are instead seemingly being channelled into resolving debts with lenders.
This is a huge achievement – although not everyone has benefited
Households in the UK have never repaid so much debt. Many people across the country must feel relieved at making such a dent in what they owe. Unfortunately, not everyone has managed to increase their repayments.
For those who have lost their jobs or just struggled to stay on top of their finances, the idea of repaying more of what they owe probably seems like an unaffordable luxury. Should the economy react as badly as some are predicting, these people could struggle to meet their financial obligations.
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This is a bleak prediction for our future but, if accurate, we’ll be on-hand to help ensure your creditors are repaid.
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Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.