Nationwide is urging those struggling financially to seek help as a perfect storm of record New Year debt, rising energy bills and tax returns is set to make January a tough month for many.
According to Nationwide’s spending data, debt levels in November were already four percent higher than the same month last year, at £696 million versus £672 million, as more customers borrowed to cover the cost of Christmas.
Nationwide’s data shows debt has been rising for a number of years, with the recent surge eroding positive gains made during the pandemic. In January 2024, customers made debt repayments of £796 million – a 43 per cent increase when compared to January 2021 (£556m) and a 29 per cent increase on pre-pandemic levels when £619 million was repaid in January 2020. As a result, debt in January is on track to be the highest since we started tracking prior to the pandemic.
In addition to debt spiking, January also coincides with an increase in the energy price cap and the deadline for Self-Assessment Tax Returns. This is set to pile further pressure on many households at a time the cost of living remains high.
Nationwide, which operates a dedicated cost-of-living helpline2 (0800 030 40 66), is reminding anyone struggling to contact their bank or building society to help them get back on track. Nationwide offers expert support – in branch or over the telephone – ranging from financial health checks to forbearance options for those facing financial difficulties.
However, while debt has grown, people are still managing and figures from the Office for National Statistics show that unsecured household debt relative to household income remains at manageable levels and is well below peak3.
Nationwide’s data also highlights that despite the rise in debt, people are still spending on luxuries. In a bid to offset the January blues, many people will soon start planning vacations. In January 2024, Nationwide customers spent £428 million on booking holidays – a 50 per cent increase when compared to the previous month. While holiday spend dipped during the pandemic, it bounced back with spend now 17 per cent higher than January 2020 (£365m), so there is there is every reason to think this trend will continue in January 2025.
Mark Nalder, Nationwide’s Payments Strategy Director, said: “December is always the peak month for spending, and many will turn to credit to fund their Christmas festivities. Unfortunately, this means many start the New Year with more to pay back. And with rising energy bills and annual tax returns, January could be a long month for many. This is why we traditionally see a jump in spending on holidays as people have something to look forward to. For customers who are struggling financially, whatever time of year it is, they should get in touch with our cost-of-living helpline for support in getting back on track.”
Nationwide’s monthly Spending Report1 analyses over 244 million debit card, credit card and Direct Debit transactions. It shows just over £7.9 billion was spent overall in November. Spending overall was up 4 per cent compared to the previous year, while transactions were up 4 per cent:
- Essential spending overview (full data by category in table below): the amount spent in November reached £4.4 billion – a four per cent annual increase. Transaction volumes (c.123m) also rose four per cent versus last year. Housing costs continue to account for some of the biggest rises, with mortgage repayments rising 12 per cent, while rents increased by six per cent. The cost of travel on public transport saw a 10 per cent increase but fuel spend reduced by five per cent due to lower costs at the pump.
- Non-essential spending overview (full data by category in table below): at c.£3.5 billion, overall non-essential spending was up five per cent compared to November 2023 with transactions volumes (c.121m) up six per cent. The start of the festive season meant spend on leisure and recreation (+11%), health and beauty (+9%) and eating and drinking out (+8%) saw noticeable rises. However, there were sharp declines in spending on dating (-27%) and giving to charity (-21%).
Holding one of Nationwide’s three main current accounts gives people access to the Society’s Flex Regular Saver product, offering 6.5% AER on monthly deposits of up to £200 per month. Nationwide currently offers customers switching to one of the building society’s main current accounts £1754, with joint account holders potentially receiving £350 to move from their existing provider if they switch a sole and joint account.
