The Office for National Statistics (ONS) has published new data showing that average household financial debt has risen by 11% in two years. However, much of the increase is accounted for by a rise in student debt and hire purchase debt rather than significant growth in credit card, payday loan or guarantor loan debt.

Data collected between April 2014 and March 2016 showed that total household financial debt was £107 billion, and this rose to £119 billion when the ONS looks at data collected between April 2016 and March 2018.

The mean household financial debt rose by 9% to £9,400 and median financial debt increased by 12% to £4,500.

The number of households where at least one person has some form of non-mortgage debt increased from 12.4 million in the 2014-16 study to 12.7 million in the most recent figures.

The poorest 10% of households have total debts which are three times larger than their total assets. Conversely, the richest 10% of households have assets that are 35 times larger than their debt. Over two years, the wealth of the richest 10% grew four times more quickly than the equivalent figure for the poorest 10%.

44% of UK adults say they see their debts as a burden.

Total household debt currently stands at £1.29 trillion, according to the ONS, and this represents a 4% increase over two years. This figure is significantly higher than the household financial debt figure as it includes mortgages and equity release debt.

Sarah Coles, a personal finance expert at financial firm Hargreaves Lansdown, was widely quoted in the media when they reported these ONS figures. Ms Coles commented:

“The figures are skewed slightly by the £32bn of student debts – which the vast majority of graduates will never pay back in full. However, even excluding that we’re carrying £87bn in loans, credit cards, hire purchase agreements, overdrafts and arrears.

“Not all these debts are the same: there’s a world of difference between taking an affordable, low-cost loan for vital home improvements, and living on your overdraft month after month. But if you’re one of the 44% of people who see their borrowing as a burden, it’s worth taking steps to deal with your debts.

“If you’re not shopping around for utilities, media, mobile, broadband and groceries it’s a good place to start. If you’ve already done these easy steps, you may need to make tougher decisions about lifestyle sacrifices you can make to cut costs. You can then use any money you free up to start paying off your most expensive debts.

“While you’re repaying, it’s pointless forking out more than you need to in interest, so consider switching somewhere like a low-cost loan or a credit card with a 0% introductory period, to save. The only proviso is that you can’t see this as an excuse just to spend more money or you’ll end up doing more harm than good.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article