Average bank balances are up and overdraft usage and missed credit card repayments are down. These are the positive takeaways from data released by credit marketplace ClearScore.
The data is provided by open banking technology and is based on 560,000 UK bank accounts. Specifically, average bank balances have increased by 6% in the last twelve months. Meantime, the use of overdraft facilities has fallen by 7%.
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Justin Basini, CEO and co-founder, ClearScore, said: “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.”
ClearScore data also shows that delinquencies, or missed payments, have fallen by 13% in the last three months for cards. They are also down by 10% in the last quarter for loans. This data further highlights 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.
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By GlobalDataThese changes include spending less on both essentials. For example, 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. Examples include property (62%), a new car (58%), and wedding expenditure (51%).
Despite this growing resilience, the cost-of-living crisis still presents challenges and pressures on household finances.
ClearScore teams up with StepChange
To help its users manage their finances and avoid problem debt, ClearScore agreed a new partnership with StepChange, the UK’s leading debt advice charity in April. The partnership gives users access to StepChange’s ‘Money Health Check’ tool. This 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.”
