Over 13.9 million people expect to see out 2022 in debt

Borrowing today is a reality for many people and over 13.9 million1 people, 26% of the UK population, expect to end the year in some form of debt according to new data from Tesco Bank. This includes borrowing from friends or family, through credit card spending, overdrafts, loans or buy now pay later spending.

Amongst the younger age groups, those aged 18–34-years-old, the proportion rises with over two in five (43%) expecting to see out the year with some debt.

The reasons are varied but the rising cost of living is a key driver. A third (33%) of people will be in debt because the cost-of-living crunch has only added to long term debts. Needing to borrow money to cover high energy bills (30%), rental/ mortgage payments (18%) and funding/ financing special occasions (15%) are also contributing to why people expect to end 2022 in debt.

Tesco Bank’s internal figures also indicate that even before the cost-of-living crisis started to bite, families were looking into their borrowing options. Nearly two in five (39%) UK consumers took out a personal loan to help support their household finances.

On average, people expect to owe £3,070 by the end of December 2022. This rises by almost £900 to £3,930 amongst 35–54-year-olds. And people expect to be in debt over the short and medium term, estimating an average of 21 months to clear debts.

As part of the research, Tesco Bank also looked at how people view debt in the current climate. A third (33%) of people say it’s very easy to slip into owing money and a similar proportion (31%) think there should be more awareness and support for people who are looking for help with their finances. However, for some, debt remains a taboo topic with 23% saying discussing debt would make them feel shame and embarrassment and 18% say they’d never confess to anyone that they were in debt.

Some people might owe money to several different lenders, and with the cost of living and some interest rates increasing, a debt consolidation loan could help. These let customers use money from a new loan to pay off existing debts. It lets customers gather all their debt into one place, so they only have one monthly payment to make instead of multiple payments. Depending on personal circumstances this could be a good way to reduce the size of monthly repayments. The total amount of interest repayable over the life of the borrowing should always be considered alongside this. Customers should always seek financial advice if they are unsure whether a financial product is right for them.

Gail Goldie, Chief Banking Officer at Tesco Bank, comments:

“Borrowing can be a helpful way of managing large or unexpected costs, and the rising cost of living means that debt is a reality for many. A lot of us will ring in the New Year owing money to either friends or family, a bank or payment provider and this means it’s important to look at how that debt is managed. Putting realistic plans in place, seeking the support of free and expert advice, distinguishing between the different debts you have, and knowing what you have coming in and going out, will help you feel on top of your finances. Depending on your personal circumstances, a debt consolidation loan could be a helpful way to manage your debts, potentially helping you to reduce the size of your monthly repayments.”

“Also make sure that any borrowing is working hard for you. Look at where you can build points or get rewards with providers, like money off at the tills or cashback, to make the spending go a little further.”

Tesco Bank has launched a series of articles with money expert Kara Gammell to help people in different situations navigate the challenges of the rising cost of living, from what to do as a single parent through to how to manage costs in a flat share.

1 – MYE2 ONS population statistics - 26% of 52,890,044 is 13,751,411 people.

Methodology: Research was conducted by Opinium on behalf of Tesco Bank. Research carried out between 18th and 21st October 2022. 2,000 UK adults aged 18+ were surveyed and results have been weighted to be nationally representative.