A third of consumers have struggled with managing debt

Millions of consumers are struggling with debt repayments and 18 per cent have missed a payment in the past year, new research claims.

One in three are struggling to manage their debts and 20 per cent said their credit score had been negatively impacted because of this, according to the results of a poll.

When excluding mortgages and student loans, the most common type of debt for consumers to have is a credit card, followed by personal loans, mobile contracts and overdrafts. 

The comparison website uswitch.com questioned 2,000 people on their personal debts and 74 per cent of respondents said they had some sort kind of debt.

This included a wide-range of debts such as credit cards, payday loans and catalogue credit, along with more everyday debts such as mobile phone repayments and home and insurance policies paid monthly.

When looking at the average amount owed, the highest amount was for car finance loans, at an average of £3,275.93, followed by personal loans, at an average of £2,982.35, credit cards at £1,947.43 and payday loans at £1,101.46.

When asked what the main reason was for taking on extra debt, 25 per cent said home improvements and 21 per cent said for holidays when looking at all age groups. While for those aged 18 – 34, 24 per cent said the two main reasons for taking out credit was to pay for food costs and to improve their credit rating. 

While some debts are quite common and being managed – monthly payments for home or car insurance, or credit cards which are paid off, for example, these are quite different to problem debts which people are unable to pay off. 

High costs: The highest average amount owed was for car loans, at an average of £3,275.93

Recent research from the charity Step Change, showed that around 3.3 million people in the UK are experiencing severe problem debt and around 9.3 million are showing signs of moderate financial difficulty.

Peter Tutton, head of policy at Step Change, said: ‘There is a blurred line between helpful credit, which is a normal part of life for many people, and problem debt.

‘For most of the clients we advise, credit only turned into problem debt as a result of a change in circumstances or a trigger event such as unemployment, illness, bereavement, relationship breakdown or another life event.

‘We estimate that around 3.3 million people in the UK are experiencing severe problem debt, and that around 9.3 million are showing signs of moderate financial difficulty.

Debt charity Step Change says 3.3 million people are experiencing severe problem debt

‘Different solutions will be best for different people, depending on their circumstances, but the most important point is that independent, free advice is available to help identify the most appropriate solution, and help people to resolve debt problems.’

Almost half of all those asked said they hadn’t checked their credit score in almost a year, if at all, but this can not only be a useful way to find out how likely lenders are to approve you for a credit, it’s also somewhere to look regularly in order to spot identity fraud.

This is because any time someone makes an application for credit it will appear on your credit score, so if someone has your details and is trying to take out credit, this is the place it will show up first.  

Tashema Jackson, money expert at uSwitch.com, says: ‘When repaying your debt, it is important to do so in a responsible manner. Always make the minimum repayment, ideally set up a direct debit to pay the bill monthly. Then, if you can, pay more than that minimum payment whenever possible as it could significantly reduce how long it will take you to pay off your debt and the interest you’ll pay.

‘For those really struggling, speak to your bank and see if they can help. If you are still concerned, charities such as Step Change offer free and impartial advice to help get your debt under control.’