Context

‘Credit Counts’ is one of the five Agendas for Change the Money and Pensions Service (MaPS) identified in its UK Strategy for Financial Wellbeing 2020-2030. In 2018, around 17% of the adult UK population often borrowed money or used a credit card or overdraft for everyday essentials such as food and bills because they had run out of money, the Credit Counts measure. Moreover, people on low incomes are twice as likely than those on higher incomes to use credit in this way, unpredictable incomes and poor credit records can compound the challenges of managing on a low income.

The Adult Financial Wellbeing Survey 2021 provides a more up-to-date opportunity to explore credit use in the UK based on the Credit Counts measure and a range of other measures that are available in the survey.

The study

credit use among UK adults in 2021, including – but not limited to – credit use as defined by the Credit Counts national goal.

Data were collected using a mixed-mode approach between July and September 2021: mainly via online panels, with additional online survey completion via postal invites and paper survey completion via postal invites (postal invites returned a total response rate of 4.5%). Over-sampling of the devolved nations, quota sampling and stratified geodemographic profiling were undertaken and the final data were weighted to be representative of the UK adult population along geographic, demographic and socio-economic dimensions and internet usage.

The report relates to data collected in 2021 before the more recent cost of living increases.

Key findings

17% of UK adults in 2021 often borrowed money or used a credit card or overdraft for everyday essentials such as food and bills This because they had run out of money. This was particularly common among:

• people with low or very low financial scores (28%), those lacking confidence managing their money (23%) and those dissatisfied with their financial circumstances overall (19%);
• young adults aged 18-24 (30%), parents (28%, especially lone parents, 32%), those on the lowest household incomes (25%), ethnic minorities (30%) and people who have experience mental health problems in the last three years (32%).

: 11% of all UK adults borrow money to pay off other debts, rising to 27% of young adults aged 18 to 24.

• 13% of all UK adults borrow money from friends or family because they have run out of money, rising to 35% of young adults aged 18 to 24.

: 50% of all UK adults struggled to keep up, were falling behind or had already fallen behind with their commitments in 2021, up slightly from 48% in 2018.

: 54% of all UK adults said that they (or their partner if they had one) had at least some outstanding unsecured borrowing (on credit products such as overdrafts, credit cards, store cards, personal loans, hire purchase, and car finance arrangements).

Points to consider

• While the report does not cite confidence intervals or statistical significance testing, further information provided by the authors confirms that all differences that are reported are statistically significant at the 95% level of confidence (p<.05).
  • Although the overall sample is large, the sample sizes that relate to specific findings are not given.
  • The authors note in the technical report that non-internet users are under-sampled in the data and that people completing paper-based surveys may have had a different survey experience.
• The patterns of findings which describe to the characteristics and factors relating to credit use (if not levels of credit use per se within the population) are likely to generalise well to contexts outside of the UK with similarly advanced economies and comparable social structures.
• The report includes analyses of additional, relevant measures beyond those which are used for monitoring the Credit Counts Agenda for Change.
  • The study is likely to be of relevance to researchers, policy-makers and practitioners who are interested in the types of credit use which tend to indicate poor financial wellbeing and levels and patterns of such credit use and financial difficulty among UK adults.