April saw a sharp rise in debt repayments as cost of living pressures continued to impact consumers, according to Nationwide’s Spending Report.
Customers repaid unsecured debts totalling £735m in April, marking a 25% year-on-year increase. The number of debt repayment transactions also rose by 14%.
Amid rising costs, many consumers have relied on credit. On average, credit card holders are repaying £391 per month, with repayments for car finance at £267 and personal loans at £195. There is some positive news, though, as easing inflationary pressures may help some individuals further reduce their outstanding debts.
Nationwide’s Spending Report, which analyses over 225 million debit card, credit card, and Direct Debit transactions, shows that overall spending in April reached around £7.5bn. This represents a 2% increase compared to the previous year, with transactions up by 1%.
Essential Spending
Essential spending in April reached nearly £4.3bn, a 1% increase compared to last year, with transaction volume up by 2%. Housing accounted for the most significant rise, with renters seeing a 33% increase and mortgage repayments up by 18%. However, spending on utilities fell by 14%, discount stores by 12%, and supermarkets by 7%.
Non-Essential Spending
Non-essential spending was £3.3bn, a 2% increase from last April, while the number of transactions remained flat. Catalogue spending, often used to spread the cost of goods, rose by 12% to £966m. Health and beauty spending increased by 5%, and holiday and airline travel by 4%. However, spending on dating dropped by 21%, DIY and home maintenance by 15%, gardening by 8%, and clothing and shoes by 7%.
Mark Nalder, Nationwide’s payments strategy director, said: “Many households have turned to credit as a way of dealing with rising prices.
“While some are using it to spread the cost of luxury items, such as holidays, others are relying on credit to help pay essential bills.
“However, a 25% rise in credit repayments should be looked at in the round. As much as some people will be relying more on their credit cards and loans at this time, a notable fall in essential costs such as energy bills and supermarket spend means others will be using the opportunity to repay more debt while they can.
“We would encourage anyone struggling with debt or worried about their finances to get in touch as we offer a range of tailored support for those facing financial difficulties.”
