Precious Plastic 2015: How Britons fell back in love with borrowing

Our latest Precious Plastic report projects that the average UK household is set to owe close to £10,000 in unsecured debt by the end of 2016.

While borrowers sought to reduce their debts in the years following the financial crisis, this period of retrenchment has now ended:

  • Unsecured debt has bounced back to an all-time high, in cash terms, of nearly £9,000 per household by the end of 2014.
  • Credit cards are staging a revival, and newer forms of borrowing such as peer-to-peer lending are starting to gain ground.

The report warns that while most Britons are currently in control of their borrowing – and are confident in their ability to remain so – there is a danger of complacency.

  • The total household debt to income ratio is projected to reach around 172% by 2020.
  • PwC analysis indicates that a 2 percentage point increase in the cost of servicing consumer’s debt would see households needing to find an extra £1,000 a year, just to cover the additional interest costs

In the face of regulatory scrutiny, aggressive competition from new entrants and changing consumer behaviour and expectations, the industry, and particularly credit card issuers, are on the brink of significant change.

Infographic 1 - Unsecured lending rebounds Infographic 2 - The PwC Credit confidence survey Infographic 3 - Strong profits...for now