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Warning: Late repayment can cause you serious money problems. For help moneyhelper.org.uk

How much is the UK in debt?

The cost of living in the UK continues to rise

The cost of living in the UK continues to rise, at a much quicker rate than earnings. The average cost of food has risen by over a quarter since 2008 and transport costs now reportedly eat up nearly one-fifth of people’s budgets

Childcare costs have also risen. In some cases, families have seen the cost of putting their two-year-old in full-time nursery rise by more than 50%.

The Autumn 2018 statement from the government revealed that in line with inflation, earnings are on the up: the UK living wage is set to rise by 2.9% across the country and by 3.4% in London in April 2019. Meanwhile, the national minimum wage is set to increase by 4.85% from £7.83 to £8.21.

However, despite these increases, many households will still be left struggling to cover the costs of everyday expenses. This is placing a significant strain on how we manage to save, and afford essentials, and is ultimately leading to increased borrowing among UK households to make ends meet. This, in turn, means greater levels of personal and overall debt.

Here, we’ve looked into how much people in the UK owe and better ways to manage what you’ve borrowed.

How much is the UK in debt?

According to The Money Charity’s October 2018 report, the current average total debt per household in the UK – including mortgages – was £58,776. This is £1,198 higher per household than was reported just ten months earlier in January 2018.

The portion of household debt that comes from consumer credit such as credit cards, personal loans and car finance has also increased.  An estimated £7,848 per household is now owed on average, with £2,647 per household of that coming from credit card debt alone. As you may expect, mortgages and credit cards, are the most widespread, according to the BBC.

The charity Stepchange has highlighted that those whose debt problems had reached the point of seeking help and advice from them, had an average debt of £13,382, excluding mortgage debt. The large majority of those turning to the charity for help were renters (82%).

What to do if you need to borrow money in an emergency but worry about debt

For many of us, using credit is a part of life, and when used responsibly, gives us the ability to cover our costs, make important purchases and achieve life milestones. From mortgages to credit cards to short-term loans, the range of credit products available are meeting that need for UK households. But needing to borrow money, especially in an emergency situation, may not sit entirely comfortably with you.

A short-term loan can be useful if you need to cover a cost urgently and don’t have the money elsewhere. It is really important that you carefully think through the pros and cons first and do your research before applying. Sunny offer access to short-term loans for emergency situations but before applying it’s important to ask yourself the following questions:

Is there any alternative?

Perhaps you have savings you can use to cover this cost so you’re essentially borrowing from yourself. Or, maybe you could lean on a friend or family member to help you financially in this time of need. Also, ask yourself if this cost is really urgent and needed right now or is it possible to postpone dealing with this situation until you’ve saved up the money to pay for it, or have next been paid by your employer?

Have you shopped around to find the best deal?

Different lenders offer different deals and rates, so it’s a good idea to shop around and compare before you choose. But, remember interest rates aren’t everything, a lender that doesn’t charge fees may be a more cost-effective choice when you look at the total cost of borrowing.

Are you borrowing the right amount?

It may be tempting to borrow more than you need for your immediate expense so that you can cover others as well, or even have a little extra disposable cash to play with. But, the more you borrow, the more you’ll eventually have to pay back and it could take you longer, and cost you more in interest to pay back in full.

At the same time, if you don’t borrow enough to cover your expense, it may not be possible for you to “top up” or extend your loan later if your emergency is more expensive than you thought it would be and you can’t make up the difference yourself. Think carefully about how much you need and borrow as little as possible while still covering the priority expenses you have to deal with.

Have you sought advice for any problem debt you may be struggling with currently?

If you’re already struggling financially, it’s so important to tackle the problem rather than apply for more credit to try to make ends. Taking on more debt will only make matters worse.

You may find it helpful to seek free and impartial advice from a not-for-profit financial service such as The Money Helper or StepChange. Even if you’re not in any financial difficulty, speaking to an advisor from one of these services for an unbiased perspective on your circumstances could still be helpful.

More information on borrowing

Want to know more about your options when it comes to borrowing money and debt? Take a look at our other guides below.