While most UK households have felt the financial impact of the pandemic, some have suffered more than others. Almost a third of families with children at home (32%) are struggling to pay down debt which has accrued since the first UK lockdown began in March 2020, compared to just 16% of households without children, according to the latest Household Financial Confidence Tracker from comparethemarket.com.
Excluding mortgage repayments, UK households say that their debt sits at nearly £9,500. Families with children have more debt to burden, with this group reporting they have an average debt total of almost £12,000. By contrast, families without children say their debt equates, on average to nearly £8,000 Across all groups, households report that their highest debt is on personal loans, at an average of £2,688 per household, followed by credit cards (£1,900) and debit cards (£881).
Of those struggling to pay off outstanding debt, the majority are suffering in silence – 60% have not sought financial support, either through universal credit, debt charities or charities like Citizens Advice. Many could be unaware that there are solutions and advice available to them that may help reduce their debt. comparethemarket.com is urging those who are struggling to seek financial guidance and to also check whether they could save hundreds of pounds by switching household bill providers.
In order to manage debt levels more than a quarter (29%) of UK households have started a budget, 27% sold unwanted or unused items such as furniture, toys or clothes, and 26% decided to put off any large purchases. Confirming how some households have struggled to save for a rainy day, nearly a quarter (24%) have tried to pay down debt instead of putting any money into savings. Consolidating debts can be an effective way to reduce debt but only 8% have used this method.
However, there is hope that this financial uncertainty will be short lived as a third (33%) of families with children anticipate their finances will be in a better position by the end of the year than they are today.
Ursula Gibbs, Director at comparethemarket.com, said: “Families have faced extraordinary financial challenges throughout the pandemic. Even though the UK is now open again after Freedom Day, worries around debt that may have stacked up during lockdowns, in some cases to help make ends meet, means this may still be a stressful time for some. No one should suffer in silence and there is help available. Money management services and debt charities, like Citizen’s Advice and the Money Advice Service, can offer free confidential advice and support to help people tackle their debt.”
“It is also worth seeing if you can cut down monthly outgoings by switching household bills. Of those surveyed, almost a quarter changed provider to get a cheaper deal and help reduce their debt. While it may seem like a small step, it only takes minutes and could save hundreds of pounds each year.”