Cost of living crisis?

Georgesgran

Gsm I agree - I’m still hardly using cash at all. My credit card statement is long - often 3 pages, but made up of so many small purchases where I’d previously have used cash. Always paid off in full, although I occasionally go for a balance transfer for a very expensive purchase (holiday). Years of financial education has finally produced results!

As do I. The bulk of my monthly expenses; fuel, food, eating out, whatever, goes on my John Lewis credit card which is then paid in full at the end of the month, and generates JL vouchers too. So, the statistics about credit card spending do not tell us anything unless it includes figures of how many pay it in full. Also, see my previous post regarding necessity of using credit card in the past.

Yes savings interest rates have risen as the Bank of England base rate rises.
Someone close to me has a large sum from an inheritance and invests it. She receives £300+ more in monthly interest than before. It helps her a lot.

Maybe. I think the total debt burden report is more revealing because although it’s a bit out of date now that does show the debt increases for different forms of debt rather than just credit cards,

Possibly part of the increase is due to people no longer paying in cash?

Germanshepherdsmum

I read the link quickly, I admit, but I don’t see how it can differentiate between debt which will be paid off when the statement arrives and debt which is being paid off so slowly that it’s probably increasing. I pay for pretty much everything on my credit card - groceries, fuel, energy, everything that isn’t on a direct debit - but the resultant debt lasts for one month at most, then it’s paid off.

I do exactly that too GSM, I’m sure many millions do the same because it’s beneficial to do so. From what I read, if you pay off in full when you get your statement, (mine is a direct debit to pay it off in full on the due date each month, which I think a lot of people do), because you haven’t accrued any interest to pay back it isn’t counted as part of the total credit card debt figures.
Regardless of that though, the key fact is that the total credit card debt is increasing, so comparing like with like, even if it did include those who pay off in full each month that would be in the original calculations too, and the figure is worsening.

Interest rates on savings have gone up for those with a lot of savings? I wish!

GSM - same here

Don't forget that interest rates have gone up for those with a lot of savings so their higher costs are being offset.

The rich get richer and it's always been the case.

My state pension is going up by 10%. But 10% of what I get isn't a lot, it may cover the increase in my council tax and some extra for food and essentials . So it sounds a lot but really isn't. I live on way less than £10k but all the usual bills of keeping a house going and I'm happy enough. I find average wages these days staggering.

Where I live the nail bars and barbers are doing a roaring trade. A local garden centre is always booked up solid at lunchtimes, I've given up trying to go there. Everything around here seems to be as bustling as ever.

I read the link quickly, I admit, but I don’t see how it can differentiate between debt which will be paid off when the statement arrives and debt which is being paid off so slowly that it’s probably increasing. I pay for pretty much everything on my credit card - groceries, fuel, energy, everything that isn’t on a direct debit - but the resultant debt lasts for one month at most, then it’s paid off.

Hithere

Budgets are adjusted to match the current circumstances

Jumping to credit card debt is a huge stretch

If you read the attached report above *Hithere it includes different types of debt, including money lenders, it’s not about credit card debt, but the total debt burden.

Aveline

Obviously I've been very concerned about this and the news is full of strikes and wage demands from various groups.
However, in town last week on a rare evening out, I was astounded to see all the bars, restaurants and clubs packed out. Our taxi driver said it's been like this for ages. On top of this I've just read of a huge influx of holiday bookings for this year with an average price of £3000+.
What's going on? Are things not as bad as the media makes out?

Aveline, What's going on? Are things not as bad as the media makes out?

Everyone has different income, expenses, needs and wants. COL crisis won't have the same impact on all people.

Didn't read other answers, but I suspect many agree, it's logic.

Budgets are adjusted to match the current circumstances

Jumping to credit card debt is a huge stretch

Casdon

Just to clarify, the credit card figure is for outstanding debt. If a card is paid off at the end of the month it doesn’t accrue interest, so my understanding is that wouldn’t be classed as outstanding debt.

Here’s a more detailed breakdown of consumer debt in the UK.
www.nerdwallet.com/uk/personal-finance/the-household-debt-report/

(At the end of the month in which the expenditure occurred)

Just to clarify, the credit card figure is for outstanding debt. If a card is paid off at the end of the month it doesn’t accrue interest, so my understanding is that wouldn’t be classed as outstanding debt.

Here’s a more detailed breakdown of consumer debt in the UK.
www.nerdwallet.com/uk/personal-finance/the-household-debt-report/

I remember the last 'downturn' as the BBC called it along with their doom laden graphic. It was 2008. DH had his own business then and we braced for disaster. It was a horribly worrying time. However, somehow, wonderfully, it was all right. The customers kept coming and kept paying their bills. We were well aware of being very lucky.
As someone said upthread not everyone is affected by the current crisis - but many are.

Gsm I agree - I’m still hardly using cash at all. My credit card statement is long - often 3 pages, but made up of so many small purchases where I’d previously have used cash. Always paid off in full, although I occasionally go for a balance transfer for a very expensive purchase (holiday). Years of financial education has finally produced results!

I often use my credit card to pay the electricity bill because it’s much easier whilst on the Ovo website reading the statement rather than going into online banking- and I never, ever use my debit card online. The card is always paid off in full each month. So not a lot can be extrapolated from my temporary debt.

We also have no idea what the credit card spending has funded. Many imply that it is frivolous, unneccssary items such as going out to eat, but it could well be filling the car with fuel to get to work, or paying the supermarket shop. I have been that person; during an earlier recession when DH was unemployed, I used the credit card and hoped for the best, just paying off what I could, when I could. Yes, I know it should be paid off every month, thank you, but needs must.

What we’re not told is how much of the money spent by credit card is actually repaid in full when the statement arrives. Putting a figure on credit card spending is very confusing.

Riverwalk

Things are as bad as the media is making out, for many people but not everyone.

There are always the haves and have nots - I'm sure there are the same number, if not more, at home feeding their energy meters to keep warm.

Exactly! You may see the people out having dinner, hear of people booking holidays, but they are not the people sitting in a cold house watching their meter run out of credit. If I look in s shop window in Knightsbridge and see a handbag for in excess of £1k, I don't think that everyone in the country is doing fine if they can afford to buy luxury items like that.

In a cost of living crisis, there are still many people that it does not affect.

In the summer when airport chaos is a newsworthy subject, it will be reported how 1000s of people are having their holidays ruined.

From the Guardian, but widely reported at the beginning of this month.

‘Credit card borrowing in the UK soared in November to its highest monthly level since 2004 amid mounting pressure on households from the cost of living crisis.

The latest snapshot from the Bank of England showed individuals borrowed an additional £1.5bn in all forms of consumer credit, of which £1.2bn was on credit cards, as concerns mounted over the impact of high inflation on struggling households.’

Millions are living on a prayer that things will get better for them very soon.

Riverwalk

The bar staff and kitchen porters who'll be going home on the night bus won't be the ones booking £3000 holidays.

I don't know how anyone can doubt that there is a cost of living crisis.

yes, this is a good point too and this most probably isn't their only job either

The media tends to concentrate on those who are struggling with the cost of living but there are many who can absorb the rises and still enjoy their leisure activities. It is a very unfair world we live in.