United Kingdom

Britons pay £7.4bn off loans and credit cards in one month

Nervous households took advantage of the lockdown to pay off a record £7.4billion in loans and credit card debt last month.

The closure of shops, pubs and restaurants meant there was less temptation – and opportunity – to spend money.

But fears of mass unemployment and warnings that Britain is facing the worst recession in more than 300 years also appear to have persuaded many to get their finances in order.

The closure of shops, pubs and restaurants meant there has been less temptation – and opportunity – to spend money

Figures released by the Bank of England show Britons cleared a net £5billion off their credit cards and paid back another £2.4billion of non-mortgage debt such as personal loans and car finance. 

The total repayment was roughly double the £3.8billion cleared in March, which was also a record.

Josie Dent, senior economist at the Centre for Economics and Business Research, said: 'The heightened economic uncertainty combined with a near elimination of spending on items such as holidays has made consumer appetite for debt, for those who can avoid it, extremely limited.'

Including mortgages, total debt repayments fell almost a fifth from before the lockdown in April.

Figures from industry body UK Finance yesterday showed 1.86m mortgage payment holidays have been granted, the equivalent of one in six mortgages.

Those struggling to repay their mortgage will be able to extend their payment holidays for three months until October 31.

The Bank of England says households put £16.2billion in savings accounts in April, despite being offered the lowest rates on record. This is more than three times the average over the previous six months.

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