Consumer finances show resilience despite cost-of-living crunch

ClearScore data shows average bank balances have increased by 6% in the past twelve months

Overdraft usage has fallen by 7% over the same period

Missed credit card repayments down by 13% in last 3 months and down 10% on loans

Despite the ongoing crunch on household finances, Brits managed to conserve cash wherever they could over the last twelve months, new data from credit marketplace ClearScore reveals.
According to the data, powered by open banking technology and based on 560,000 UK bank accounts, average bank balances have increased by 6% in the last twelve months, while use of overdraft facilities has fallen by 7%*.

Justin Basini, CEO and Co-Founder, ClearScore, commented: “Overdraft usage is an important indicator of affordability and good financial planning in general. Many of our lender partners will use this in their risk assessment, so to see this falling is positive news for borrowers.”

The ClearScore data also shows that delinquencies, or missed payments, have fallen by 13% in the last three months for cards and down 10% in the last quarter for loans – further highlighting that the financial position of consumers is improving.
At the same time, essential spend, defined as groceries, bills, fuel and rent for example, as a proportion of income held steady at the average level seen over the last twelve months (32%), despite rising inflation.

Brits make changes to mitigate persistent cost increases

Additional consumer research from ClearScore shows that people’s ability to bolster their finances comes because of the changes they are making in their spending. Over half (52%) of consumers have made small changes to their day-to-day spending habits in the last twelve months, with 38% making significant changes**.
These changes included spending less on both essentials e.g. groceries (32%) and non-essential items (49%) and cutting down on energy use at home (32%).
On top of this, many consumers have been forced to pause or delay major planned purchases including property (62%), a new car (58%), or even their wedding (51%).
Despite this growing resilience, the cost-of-living crisis still presents challenges and pressures on household finances. Therefore, to help its users manage their finances and avoid problem debt, in April, ClearScore announced a new partnership with StepChange, the UK’s leading debt advice charity. The partnership gives users access to StepChange’s ‘Money Health Check’ tool which offers budgeting tips and debt advice early in the repayment process before debt becomes a problem.

 Justin Basini added: “Britons have shown great resilience in the last twelve months in dealing with rising costs and making the necessary changes to keep their heads above water.

“With inflation now beginning to fall, we are hopefully starting to see signs of let-up from the cost-of-living crisis that has gripped the nation. However, with finances still under pressure, largely due to persistently high food and energy prices, consumers need to continue to spend cautiously and stay on top of their finances.”

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