Average household debt rises slightly in May

Average household debt in the UK rose a little in May, according to new data from Credit Action.

It stood at £54,024 (including mortgages) – up from a revised £54,002 in April – showing how people are still struggling with their finances and it is only getting worse.

However, the rate of growth for household debt is reducing and there are signs individuals are starting to get a better handle on their personal debt. 

Borrowing also underwent a slight rise during the month, with the average amount increasing from a revised £3,201 in April to £3,208 in May. Though this is an increase, it is now the exact figure it was in March. Individuals are obviously finding it hard to get out of their overdrafts and pay off credit card debt, but at least the rate of borrowing is improving, meaning people won't get in any more difficulties.

The figures also revealed an increase in plastic card purchases in April, with 29.4 million transactions made every day with a total value of £1.455 billion. This was 27.5 a day in the previous month.

Based on the May figures, the UK's total interest repayments on personal debt over a 12-month period would have been £59.8 billion, which is equivalent to £164 million a day. This means UK households would have paid an average of £2,270 in annual interest repayments, which is lower than the figure provided last month – £2,279.

Outstanding personal debt stood at £1.424 trillion at the end of May, which is the exact same figure reported at the end of June. This shows there has been some stability, but people are still getting buried by the amount of money they owe.

According to Credit Action, 274 individuals are being declared insolvent or bankrupt every day, which is the equivalent to one person every five minutes and 15 seconds.

With an increase in the amount people owe, several individuals are taking up debt consolidation loans in order to manage their money more effectively.

By Joe White