Almost four in 10 concerned about maintaining credit arrangements

Thirty-nine per cent of UK adults are concerned about maintaining their current credit arrangements, according to new findings from Shawbrook Bank’s personal loan division.

Research also revealed that 64% of people who have suffered a loss of income in 2020 are worried about being unable to pay a large, unexpected bill.

By contrast, the findings also showed that 32% of respondents surveyed said their savings had increased since the UK first went into lockdown in March 2020, with the majority (77%) of these people indicating they plan to spend the money in the next year.

Shawbrook’s research, based on responses from 2,000 people, showed that 24% said reduced outgoings has had a “significant positive impact” on their finances, with more than one in five (21%) using 2020 as a chance to pay down their debts.

However, Shawbrook also suggested the squeeze on household finances is continuing for many other families, with 25% of those surveyed saying they are currently in a financially weaker position than they were before March 2020, and a further 22% not expecting to be any better off by the end of 2021. 

Twenty-two per cent of respondents have also seen what they owe rise this year while 28% plan to borrow over the next 12 months. The research found credit cards to be the most likely form of borrowing (13%), followed by personal loans (8%) and mortgages (7%).

“Whatever category you fall into, the beginning of the year is a great time to assess your finances, and the coronavirus pandemic has only highlighted the importance of saving and budgeting,” commented Shawbrook managing director, Paul Went. 

“Taking money management back to the basics by reviewing how much you have coming in versus what is going out is always the best place to start if you want to get on top of your finances. Wherever possible people should aim to have three months of expenses saved up as a rule of thumb, as this will give you a buffer should the unexpected occur.

“For those thinking about borrowing or taking out new credit, this is not a decision to rush into. Think carefully and take the time to shop around to make sure you are getting the best deal for you. If your circumstances change, would you be able to afford repayments? Do your research before committing to any additional finance and make sure you read the small print within any contracts.”

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