In April, during the height of the coronavirus lockdown, Bank of England statistics show that British households repaid record amounts on their debts – totalling around £7.4bn of consumer credit.
During April, Bank of England statistics show that British households repaid record amounts on their debts – totalling around £7.4bn of consumer credit.
To put this into perspective, around £5bn of that was spent on credit cards. On a typical month, we generally manage about £300million. The total net repayment is a new record and this hasn’t been seen since before 1993.
Commenting on the findings, a spokesperson for a personal finance website stated:
“You often hear how people are reckless with credit, well this is the polar opposite
It's the level of caution and good financial common sense of people paying down debt which I find encouraging… it's good that people are making efforts to reduce debt now…”
The reason for this appears to be due to people spending less on leisure and retail activities during April. Instead, it appears the funds usually dedicated to such pursuits have been allocated towards repaying lenders.
Search for money-saving tips online and you’ll find a range of suggestions. One of the most common is to reduce your spending or have fewer nights out. If you’ve ever heard similar advice and wondered just how effective missing a few social engagements can be, these figures serve as your answer.
Many experts are predicting a slowdown in the economy as well as a possible recession. Of course, if you’ve managed to repay your creditors – and have more disposable income as a result – you may have an effective safety net should the worst occur.
Of course, these statistics from the Bank of England don’t represent everybody across the country. For those who have lost their jobs or simply struggle to make ends meet, the idea of stepping up repayments to lenders probably seems like a very unrealistic one.
If you’re concerned about your finances and feel you aren’t prepared for a recession, then don’t worry – hope is not lost. If this occurs, we’ll be on-hand to assist. For example, we could help set you up with an IVA – a solution which ultimately aims to write off your arrears and leave you making only one affordable payment each month.
To find out whether you would be eligible, complete the form below and one of our debt advisors will be in touch.