Coronavirus: Borrowers have paid £2,000 in debt each in lockdown

Borrowers have taken advantage of Britain’s three-month lockdown to get over their debts and pay off nearly £2,000 in credit card and other borrowing, new figures suggest.

Data from credit reference agency Experian found that customers’ amount for the Credit Expert subscription service of £14.99 per month outstanding in non-property borrowing fell from £11,615 to £9,681 between the close of March 23 and June 8.

Meanwhile, the percentage of customers who owed more than £30,000 fell by a third to 8.6 per cent over the same period, as those who found themselves with more disposable income used it to pay off outstanding debt.

Time and time again, official figures find Britons have saved billions of pounds on lockdown thanks to the shutdown of swathes of the economy.

Experian did not disclose how many customers had paid for the subscription service, which offers a free 30-day trial and offers advice on how to improve credit scores, but said it was a large proportion of its 8 million customers in the UK and was broadly reflective of British borrowers. .

Official figures revealed how Britain has become a nation of ‘casual savers’ during the coronavirus lockdown, with 22 per cent of households’ weekly spending usually going on activities that were largely restricted.

As a result, £57.3bn was saved by households in March, April and May, according to the Bank of England, while new borrowing fell dramatically and five years of credit card debt was paid off in just five months between February and June.

Earlier this week, UK credit card and loan loans were expected to fall by 16 percent this year and not return to 2019 levels until 2022, according to forecasts from the EY ITEM Club.

“For some people, lower spending enabled repayment of existing borrowing and a surprising improvement in credit scores,” said James Jones, head of consumer affairs at Experian.

Disinfecting plastic: How Brits avoided their credit cards amid coronavirus
Month The amount owed on credit cards monthly change Monthly percentage change Annual percentage change
January 72.1 billion pounds sterling £0.2bn 0.2% 4.3%
February £71.9bn £0.0 billion 0.0% 3.5%
Walk £69.3bn -2.4 billion pounds sterling -3.3% -0.3%
April 64.1 billion pounds sterling -5.0 billion pounds sterling -7.2% -7.8%
mayo 62.1 billion pounds sterling £-1.8bn -2.8% -10.7%
Jun 61.6 billion pounds sterling £-0.2bn -0.4% -11.6%
Source: Bank of England (seasonally adjusted data)

However, the latest Bank of England figures also indicate that households are starting to borrow again. Between March and May, households paid back £15.6bn more than they borrowed, but this fell to £86m in June as lockdown restrictions eased further.

“Two-thirds of people plan to keep some of the money-saving habits they built during lockdown, but that won’t stop borrowing from returning to pre-coronavirus levels eventually,” said Sarah Coles, personal finance analyst at DIY investment platform Hargreaves Lansdown.

“The question is just how long it will take.”

James Jones added: ‘As the UK slowly begins to return to some sort of normality, people should continue to practice the good financial habits they adopted during lockdown, especially when they have positive effects on your credit report and score.

“A good credit score can help secure lower rates on future borrowing, so a good dividend can be paid.”

Although Experian and Equifax, another of Britain’s three largest credit reference agencies, offer monthly subscription services, consumers can see their credit report for free if they need to by requesting a copy of their legal report.

This report displays details of bank accounts, mobile phone contracts, credit cards or other borrowings taken and recorded at your address.

It can be viewed online or mailed, although mail orders Experian warns may take longer to arrive at this time. Consumers can also order their report from the third of the Big Three companies, TransUnion, online or by mail.

TransUnion said one in three UK consumers have checked their credit score due to the lockdown, with 4 million doing so for the first time.

That’s five money from the best credit cards

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