The Money Stats – January 2019 – Low Savings and Rising Debt Across UK Points to Need for 2019 Financial Resolutions

New Year's Resolution

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The UK’s New Year’s Resolution should likely be a financially-minded one, with the recent pattern of low savings and steadily rising debt continuing towards the end of 2018, according to the January 2019 Money Statistics, produced by The Money Charity.

The balance of savings and debt throughout the UK in 2018 continued to be uneven, as the third quarter of the year saw an average household savings rate of just 4.3%. At the same time, average consumer debt per household reached £7,854, with the average total debt per household (which includes mortgage debt) hitting £58,948.

In the year up to November, average total debt per UK adult rose by £898.71, which equates to around 3.3% of average total pay. While an amelioration in pay would improve this picture, the latest figures from the ONS instead reveal more than a decade of pay stagnation with average real pay (pay adjusted for inflation) in November 2018 5.7% below the pre-crash peak in February 2008.

The uneven picture continues when examining the marked disparity between typical interest rates being offered for savings and those for loans. The average cash ISA rate in November 2018 stood at just 0.88% in contrast to the average credit card interest rate, which was 18.69%.

Against the backdrop of this rate, if credit card holders were to make only the minimum required repayment each month, it would take around 26 years and six months to pay off the average credit card debt per household of £2,643. This timeframe reduces to 5 years and three months if the cardholder pays the initial minimum as a constant amount each month, rather than paying a decreasing monthly minimum.

In November 2018, UK borrowers paid a total of £140 million per day in interest.

Michelle Highman, Chief Executive of The Money Charity says:

“At a time of year when people are looking for a ‘fresh start’, alongside counting the impact of a busy Christmas and holiday break, the need for sound financial planning, clear budgeting and greater financial understanding across the UK is clear.

“The hangover of committing to unmanageable debt pinches hard for many at the beginning of the year, but we continue to believe that financial capability is the answer. Managed well, and with the right skills, knowledge, attitude and behaviours, everyone can use their money to achieve their goals and increase their wellbeing.”

 

Other key points from the January Money Statistics:

  • The average student debt for the 2016 cohort in England was £32,220
  • On average, a UK household spends £3.97 a day on water, electricity and gas.
  • Government debt increased by £86 million a day in the year to November 2018.

Get the full picture and many more fascinating facts about money in the UK in our monthly Money Statistics.

 

Notes to Editors

  • The Money Charity is the UK’s leading financial capability charity. We believe that being on top of your money means you are more in control of your life, your finances and your debts, reducing stress and hardship, and that being on top of your money increases your wellbeing, helps you achieve your goals and live a happier more positive life as a result. Our vision is for everyone to be on top of their money as a part of everyday life. We empower people across the UK to build the skills, knowledge, attitudes and behaviours, to make the most of their money throughout their lives. Find out more at https://themoneycharity.org.uk/
  • All statistics are from the latest available data at the time of writing/release.
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  • If you’ve any questions, comments, or want any information about the source of these statistics, please contact us through hello@themoneycharity.org.uk
  • Any media or press enquiries should be directed to our Communications and Marketing Manager, James Yelland, on james@themoneycharity.org.uk