Ever feel like your credit card debt is a heavy weight on your shoulders? You’re not alone. Many people in the UK are dealing with the same struggle. But how bad is it?

In this article, we’re going to dive into the world of credit card debt in the UK. We’ll explore how much people owe, why it’s so common, how the pandemic affected credit card debts, and what you can do if you’re feeling overwhelmed by your own debt.

Let’s take a closer look and find out what’s really going on with credit card debt in the UK.

Table of Contents

1. UK Credit Card User Statistics
2. How Did Covid-19 Affect The Average Credit Card Debt In The Uk?
3. What Happens When You Don’t Pay Credit Card Debts On Time?
4. Effective Strategies To Get Out Of Debt?
5. Is Owning A Credit Card A Bad Idea?
6. Conclusion
7. Key Points
8. FAQs

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UK Credit Card User Statistics

According to Debt Justice, a record 6.7 million people in the UK are now in financial difficulty due to the cost of living crisis. How does it affect the average credit card debt in the UK? Let’s explore.

Below are some interesting insights about the average credit card debt in the UK according to the latest statistics collected in 2023.

Around 33.8 million (64%) adults in the UK have at least one credit card.
As of May 2023, the average credit card balance in the UK is £1,675.
Between June 2022 and June 2023, the total outstanding credit card balances in the UK increased by £12.1 billion, which is an 8% increase from 2022.
According to research by, 30% of UK adults use credit cards to fund their lifestyle at least some of the time and younger age groups, such as 25-34-year-olds, are more likely to use credit cards for lifestyle expenses.

Here’s an overview of how the average credit card debt fluctuated in the UK over the past decade:

2016-2019: Credit card debt in the UK rose by £600 for the average household, from £2,014 to £2,626 (or £1,386 per person).
2020-2021: There was a decrease in average credit card debt, with the balance falling below the £2,200 mark.
2022: Average credit card debt in the UK fell further, with a balance of £1,555 in May 2022.
2023: The average credit card balance in the UK rose to £1,675 in May 2023, a year-on-year increase of 7.7%.
2024: As of March 2024, the average credit card debt per household was £2,476, and per adult was £1,311.

In summary, the average credit card balance in the UK has experienced a significant increase over the past decade, with a peak in 2023 and a slight decrease in 2022.

Economic downturns, changes in employment rates, and consumer behaviour are the main reasons behind this fluctuation.

For instance, during periods of economic growth, people may feel more confident in their spending, leading to higher credit card balances. Conversely, during recessions or periods of financial uncertainty, people rely more on credit cards leading to an increase in the average credit card debt.

According to the data provided by Money Charity in January 2024, the largest proportion of credit card debt is held by individuals between 25 and 34 years old.

This could be attributed to the financial pressures of starting families, buying homes, or establishing careers. Moreover, the rise of online shopping and easy access to credit has made it simpler for people to accumulate debt without realizing the long-term consequences.

How do the major economic events like the COVID-19 pandemic affect the credit card debt in the UK? Keep reading to find out.

How Did Covid-19 Affect The Average Credit Card Debt In The UK?

COVID-19 has major effects on our lifestyles. How did it affect the credit card debt in the UK? Below is an overview of the pre and post-pandemic average credit card debt statistics.

Before the pandemic, at the beginning of 2020, the average credit card debt per household in the UK was approximately £2,592.
During the pandemic, total credit card debt in the UK declined from £72.1 billion at the beginning of 2020 to £56.5 billion in August 2021, a decrease of £16 billion. This was likely due to limited spending opportunities during lockdowns and economic uncertainty.
The average credit card debt per household fell to £2,033 in August 2021, a healthy decline from the pre-pandemic level. Per adult, the average debt was £1,068.
However, in the aftermath of the pandemic, average credit card balances started to rise again. By May 2023, the average credit card balance in the UK had increased to £1,675, a 7.7% rise from the previous year and nearly 14% higher than in May 2021.

According to the data, the impact of COVID-19 on credit card debt is a complex issue. The pandemic led to economic hardships and some people depended on credit cards for the necessities. This led to missing payments and growing debts.

However, people also spent less on recreational activities and travel which reduced the debt to a certain amount. Furthermore, credit card providers became more cautious about lending, leading to a lower number of credit card purchases.

Moreover, government interventions such as furlough schemes and payment holidays provided temporary relief but did not eliminate the underlying debt.

Said in short, the COVID-19 pandemic initially led to a significant decrease in average credit card debt in the UK due to reduced spending, balances have since started to climb back up, though they have not yet reached pre-pandemic levels.

What Happens When You Don’t Pay Credit Card Debts On Time?

Missing payments on your credit card can lead to significant negative consequences.

If you don’t make the monthly credit card payments on time, you’ll have to pay late fees and interest which adds to your overall debt.
Late payments impact your credit score negatively making it difficult to obtain credit, loans, and mortgages in the future.
Your creditor can take legal action if you miss credit card payments continuously and if the debt amount becomes very high.

When you miss a payment, it triggers a series of financial penalties. Initially, you’ll face a late

ayment fee, which can add to your overall debt.

Additionally, the interest on your outstanding balance continues to accrue, increasing the total amount you owe. If you continue to miss payments, your credit card issuer may increase your interest rate, further compounding your debt​.

This way you’re more likely to get into a debt cycle when you don’t make payments on time. Debt cycles are hard to break and can become stressful for you.

To avoid these consequences, you must communicate with your credit card issuer. Many providers offer hardship programs or can work with you to create a manageable repayment plan.

Additionally, if you’re struggling with debt, you can contact us and our professional debt advisor team will guide you to get out of your debts.

You don’t have to wait till you get a notice from your creditor to pay off the credit card debt. Several strategies would help you to pay the debt on time. What are they? Let’s dive into it in the next section.

Effective Strategies To Get Out Of Debt

Following are some of the effective strategies to get out of debt.

Balance transfer is the best way to pay off credit card debts. It can be a lifesaver if executed properly.

Balance transfer involves moving your existing credit card debt to a new card with a lower interest rate or an introductory period with no interest. This gives you time to pay off the creditor who chases you for money.

You’ll find new credit card deals where you don’t have to pay in the first few months throughout the year. However, these offers might have terms and conditions. You must read and understand the terms carefully to ensure it’s beneficial for you.

Below are some of the most important points you must consider:

How long does the introductory period/ 0% interest period last?
Are there any fees for transferring balances, which can sometimes negate the savings from the lower interest rate?
What’s the interest rate after the introductory period? If the interest rate after the introductory period is too high, you may end up in more debt.

Debt consolidation is the best option if you are dealing with multiple credit card debts. This involves combining all your debts into one loan or credit card with a lower interest rate.

Debt consolidation doesn’t pay off your debts, but it reduces your monthly payments and the overall interest rate.

Additionally, having all your debts in one place simplifies your financial life as you have fewer bills to pay and few due dates to remember.

Single monthly payment makes it easier to manage your finances.
Lower interest rates help to save money in the long run.
Less monthly payment makes it easier for you to pay consistently which improves your credit score.

You must provide many documents such as employment letters, letters from creditors, etc and become eligible for the debt consolidation.

If you consolidate the credit card debt and continue to use the credit cards you paid off, consolidation can become disadvantageous.

Various debt solutions are available in the UK, tailored to different financial situations. Here are some common ones:

Debt Management Plan (DMP): An informal agreement between you and your creditor to pay all your debts. This plan is used when you can pay only a small amount of debt each month or when you are facing a financial crisis and can make repayments after a few months. You can arrange a payment plan with your creditor yourself or through a licensed debt management company.
Debt Relief Order (DRO): The ideal solution to deal with debts if you cannot pay them off and start fresh. You must apply for a DRO through a debt advisor and meet some eligibility criteria. You’ll be assessed based on your income, financial situation, debt amount, and assets. If you are eligible, you don’t have to pay debts for 12 months and sometimes your debt would be written off after 12 months. Suitable for those with low income and minimal assets.
Individual Voluntary Arrangement (IVA): A formal agreement with your creditors to pay all or part of your debts within a specific time. Here, you pay the monthly fees to an insolvency practitioner who’ll divide it among your creditors. The insolvency practitioner will decide the amount that you have to pay each month based on your income, assets, and debt amount.
Bankruptcy: If you don’t have any way to pay off your debts, you can apply for bankruptcy as the last resort. An adjudicator will check your application and decide whether you’re eligible to be marked as bankrupt.

Additionally, there are debt charities that you can reach out to for help. They’ll help you to choose the ideal debt solution. Some of the debt charities in the UK include:

StepChange
National Debtline
Citizens Advice

Is Owning A Credit Card A Bad Idea?

After looking at the UK’s credit card debt statistics, you might wonder whether owning a credit card is a bad idea.

The answer depends on how you use it. Credit cards can be beneficial if used responsibly. They provide a convenient way to access funds and can help build your credit score when payments are made on time.

To reap the benefits of a credit card, you must learn to use it responsibly. Below are some tips to use the credit card to your advantage:

Do not spend more than you can pay. Resist the temptation to do so.
Use the credit card only to pay for needs and not wants.
Think of the credit card as a temporary loan to yourself and pay back the amount as soon as possible. This helps you to decrease or avoid interests.
If you make regular purchases with your credit card, get a card that offers rewards such as cash, retail points, or airline miles.

Protip: Always keep your credit utilisation ratio under 30%. Apply this ration for the sum of all your cards.

Conclusion

According to the statistics in late 2023, 64% of adults use at least one credit card. Having a credit card can come in handy for your financial needs and it helps to build your credit score.

However, you must use it responsibly and pay on time to avoid late fees and prevent getting stuck into a debt cycle.

If you’re already struggling to come out of credit card debts, consider balance transfers, debt consolidation, and other debt solutions available.

Understand the terms and conditions of each option carefully before opting. Seek professional advice if necessary. Fill out this online form if you need professional advice to manage your credit card debts.

Key Points

As of late 2023, the average credit card debt per household in the UK is approximately £2,363, with the total national credit card debt exceeding £67.9 billion​
The highest average credit card debt is carried by individuals aged 25 to 34. This is due to the financial pressures related to starting families, purchasing homes, and career development​.
The pandemic caused a significant decline in the credit card growth rate in early 2020. However, by mid-2023, the annual growth rate rebounded to 11.8%​.
Missing credit card payments can result in late fees, increased interest rates, and a negative impact on credit scores. Persistent missed payments may lead to legal actions and the involvement of bailiffs​
Balance Transfers, debt consolidations, and debt management plans are some effective strategies to manage your debts efficiently.
Moving debt to a new card with a lower interest rate is known as balance transfer. It can help manage payments without accruing additional interest. However, you must understand the terms, including any fees and the interest rate after the introductory period.
Combining multiple debts into one loan or credit card with a lower interest rate is debt consolidation. It simplifies payments and can reduce overall interest, making debt management more manageable​.
Credit cards can be beneficial if you use them responsibly. Pay off balances monthly, keep credit utilization low, and monitor credit reports regularly to avoid falling into debt​.
Organizations like StepChange and National Debtline offer free advice and support for managing and reducing debt, helping individuals explore different debt management options​​.
Understanding the various options and seeking professional help early can prevent severe financial consequences and help manage and eventually eliminate credit card debt​.

FAQs