Almost two million households skipped paying a major bill last month as the cost of Christmas put pressure on budgets already under strain.
Consumer group Which? said it was concerned that many families could face financial crisis in the new year, as they struggle with outstanding festive payments and the rising cost of living. A spokesperson for the financial charity said that the start of 2023 could be crunch time and missed payments could continue as households counted the cost of rising food and energy bills and increased interest rates on mortgages and loans.
Around 1.9m households reported missing at least one mortgage, rent, loan, credit card or bill payment in the last month, with 6.4% of renters missing a housing payment compared 2.5% of mortgage holders. Of those surveyed by Which?, 3.1% reported missing a loan or credit card payment and 4.6% reported skipping a bill payment. The most common type of bill missed was energy, at 2.3% of households, followed by Council Tax (1.9%), phone (1.6%) and broadband (1.4%).
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In previous years, missed payment rates tend to be lower in the lead up to the festive period and peak in January, when many households need to pay back their Christmas expenses as well as their usual household bills. In December 2021, 1.7m households admitted to missing at least one payment, but that number shot up to 2.5 million in January 2022.
The sharp hike in pre-Christmas defaults has led to concern that the figures could repeat themselves again in the coming weeks, with many households in an even weaker position to cope with the combined pressures of Christmas and the cost of living crisis.
However, more people made adjustments to pay for this Christmas, with just under six in 10 (56%) - or around 15.8m households - cutting back on essentials, selling items or dipping into savings to cover spending. This is a significant increase on the four in 10 (42%) seen this time last year, but lower than the peak of two-thirds (65%) making adjustments in September 2022.
Families will face further financial pressures in 2023 as the UK heads into a likely recession, mortgages and rent costs rising and the energy price guarantee becoming less generous from April.
Rocio Concha, Which? director of policy and advocacy, said: “With 1.9m households missing important payments in the run-up to Christmas, we’re worried that many more people could be facing financial crisis in January – as the credit repayments pile up and the cost of living crisis continues to bite. As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and broadband providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
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