Over half of UK credit card borrowers who don't pay back their credit card bill, can't afford to - whilst 15% of UK adults have missed a payment completely
According to the latest YouGov research commissioned by credit information provider Equifax1, 15% of UK Adults have missed a payment on their credit cards at some point. Furthermore, over half (52%) %) of those who don't pay back their credit card bill, admit to not being able to afford to pay off the monthly balance that they owe on the card. Following the news from the Bank of England2 that UK borrowers tend to remain indebted for longer than previously thought, this latest study offers further insight into consumer borrowing behaviour.
The study by the Bank of England with the Financial Conduct Authority, released earlier this month, showed that 89% of the total outstanding consumer debt in November 2016 was held by people who also owed debt two years earlier2Although a consumer might clear their debt on one credit card, this may not see them clear all their debt, as balances may be transferred, or new loans taken out.
The YouGov research commissioned by Equifax shows that for those individuals who have access to a credit card, nearly a third (32%) have just one card, with one in five (20%) having two cards. In addition, 13% have gone over their overdraft limit at some point without approval from the lender, suggesting that they could be at risk of slipping into unmanageable debt if their financial circumstances change.
Whilst over half (52%) the UK population who have a credit card and do not pay off their debt each month because they can't afford to, the regional picture in some areas is worse. In the North of England and London people appear to be struggling the most with their debts, as 58% say they can't afford to pay off their monthly credit card balance in full each month. This is followed by 53% of individuals in Scotland and 54% in the South of England.
Overall, 15% of respondents have missed credit card repayments, and this falls to 12% in the Midlands and 14% in the North. In contrast, people in London and Wales most likely to miss a payment (19%).
"It's clear to see that many people are taking on a lot of credit, which could leave them vulnerable to mounting debt, especially if their situation changes or the economic landscape shifts,” explains Lisa Hardstaff, credit information expert at Equifax. "It is not uncommon for UK households who face uncertainty over their finances to look to credit to help them get by. Our latest study shows that 40% of individuals use their credit cards for day-to-day spending, which fits this picture. In addition, 22% use their credit cards to make larger purchases that they can pay off over time.
"Although 19% of individuals said they had more debt in 2017 than the previous year, it is positive to see that over a third (34%) plan to reduce the amount they owe in 2018. Taking out credit can help families in everyday life, as long as it is used in the correct way. This latest study highlights the need for consumers to understand their financial position to help them stay in control of their spending and reduce the risk of overwhelming debt.”
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The Equifax Credit Report & Score is accessible for 30 days free simply by logging onto https://www.equifax.co.uk/Products/credit/credit-score.html. If customers do not cancel before the end of the 30-day free trial, the service will continue at £14.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.
1All figures, unless otherwise stated, are from YouGov Plc. Total sample size was
undertaken between 2nd - 3rd January 2018. The survey was carried out online. The figures
and are representative of all UK adults (aged 18+).
Equifax Inc. (Equifax) is a global information solutions company that uses unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.
Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs 10,100 employees worldwide.
Equifax Limited is one of the Equifax group companies based in the UK.
Equifax Limited is authorised and regulated by the Financial Conduct Authority.