For the first time, rising cost of living cited as most common reason for debt in June
For the first time, June saw the rising cost of living being the most commonly cited reason for debt among StepChange Debt Charity clients, with nearly one in five (18%) alluding to it as an underlying cause of their financial problems, according to StepChange’s latest monthly report.
The pressure arising from the cost of living is being widely felt but is most acute among those on low incomes and already experiencing low financial resilience or debt problems.
The StepChange Debt Charity website received visits from 295,000 users in June 2022, which is slightly lower than in May 2022 and June last year (325,000). Despite a decrease in overall users, the emergency funding page saw 22,200 visits in June 2022, an increase of 17% compared to May 2022. This remains the most commonly visited debt information page. There has also been a 104% monthly increase in visits to the benefits calculator (4,400 visits), and a 600% increase in visits to information about hardship payments (2,500 visits) which includes information about Universal Credit (UC), Jobseeker’s Allowance (JSA) and Employment and Support Allowance (ESA).
The Bank of England’s latest Money and Credit statistics, published today, showed a net increase of £1.8 billion of consumer borrowing, £1.0 billion of it on credit cards – likely to mask the use of credit as an emergency coping strategy against the rising cost of living for a cohort of struggling households.
Richard Lane, StepChange Director of External Affairs, said: “It’s no surprise that we finally reached the point in June where the rising cost of living became the most commonly mentioned reason for debt among people turning to us for advice. People are seeing the financial cushion between their income and their essential spending being squeezed and, in many cases, turning negative.
“At the same time, the Bank of England is reporting that June also saw a net £1.8 billion increase in consumer borrowing. While the received wisdom is that rising borrowing signals consumer confidence, we know all too well that it can also be a sign of financial pressure. We urge anyone considering borrowing to make ends meet to seek advice from a reputable source like StepChange to see whether other options may provide a more sustainable way of addressing the pressure of debt.”