Context

The Money Advice Service (MAS) had identified 8.8 million people in the UK as over-indebted, but few were seeking advice. The study sought to better understand differing situations, levels of knowledge, attitudes and behaviour in order to shape money and debt advice services. “Over-indebted” people were defined as those who reported finding their debt a heavy burden or those who had missed payments in three or more of the preceding six months.

The study

Public Knowledge undertook 5,000 attitudinal and behavioural interviews of over-indebted people across the UK. Experian then undertook a segmentation analysis, matching the interview data to its demographic database to identify eight groups with distinct characteristics, attitudes, behaviours and needs. The study identified estimated sizes of these groups and developed detailed pen portraits of each in order to help inform more targeted and relevant advice services.

Key findings

• Although 82% of over-indebted people agree that it is important to be free from debt and 70% were anxious about their debt, only 17% were engaging with advice, and 22% were considering it.
• One in five (21%) of the over-indebted do not recognise that they are in debt.
• 29% of respondents would like their initial contact to be by e-mail. The high popularity for e-mail contact is not currently being met.
• Promoting debt advice effectively will entail showing how services can support people’s differing priorities. It should offer a range of self-help approaches and help build resilience, not least by offering wider money advice.

The and their broad characteristics are:

Tend to be young, privately renting, with low income. Expect to be in debt and more likely than other groups to miss payments. Only 9% are seeking debt advice despite high levels of missed payments; they may respond more to wider money advice.

Young, low income and tend to miss payments. Recognise that they are in debt but often willing to balance debt against other priorities. Considering seeking advice in the future. May respond best to general money advice with the hook of potential home ownership.

Most likely to be aged 25-34, a household income of £20,000 to £40,000 and buying or renting privately. Accept that they are in debt and feel in control but may not prioritise repayment. 30% are either receiving debt advice or about to receive advice. New and challenging life events may lead to further uptake; a mixture of money and debt advice may be best to engage this group.

Most likely to be aged 25-34 and renting. Used to and risk being resigned to debt. Concerned about dealing with creditors. 32% are receiving or considering advice and may benefit from a wide range, including dealing with creditors and prioritising debts.

Tend to be aged 35-44, renting and employed. Very aware of the effects of debt and often feel debt is out of control. But only 18% are receiving advice; they would be most attracted to personalised solutions and need to feel that their problem can be solved. Would also benefit from wider advice.

Aged 35-54 and largely employed homeowners. Worried by debt and at 20% the segment most engaged with advice services (and 17% willing to consider it) and to have identified the problem. They are most receptive to debt advice.

The largest segment (over 20%), aged 35-64, renting and with low income. Tend to be resigned to debt and disengaged from advice, but as the group most likely to have missed payments their need is urgent. Debt advice is the best way to engage, providing solutions and support to achieve a “clean slate”.

Aged 55 or over and two-thirds are homeowners. Most likely to prioritise debt reduction over spending, but polarised attitudes to seeking advice. Likely to be more responsive to generic money advice than debt advice.

Points to consider

• A segmentation analysis of this sort is based on a desire to identify reasonably distinct groups within the wider sample or population. There will always be variation within each group and indeed the total number of segments could vary. In this exercise, there might have been seven or eight segments: the researchers chose the latter to separate young workers from students. There is a full data and technical report available at https://masjumpprdstorage.blob.core.windows.net/cms-production/debt-sub-segmentation-final.pdf
• The eight segments cover the wider over-indebted UK population; there is further breakdown by local authority within the report.
• In line with the methodological approach, the report identifies broad categories. While this should aid wider planning, individual circumstances and priorities will inevitably vary.

Full report

Indebted lives: the complexities of life in debt - full report