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About eight million people have sought help with their debts during the coronavirus crisis, research by Virgin Money has found.
The figures will raise fears of a growing debt bubble with Britain's consumer loans now standing at £220billion despite attempts by many families to pay down debts during the lockdown.
Virgin Money surveyed more than 4,000 people to assess the state of the nation's finances as the taxpayer schemes propping up many bank balances are set to wind down.
Trying to make ends meet: Banks are expecting large numbers to default on loans in the second half of the year
It found around one in eight had called on their bank for help in the form of overdrafts and payment Crystal Holidays Travel on mortgages, personal loans and credit cards.
Spending is expected to ramp up as the economy reopens, limiting the spare cash available to pay off credit cards.
Banks are expecting large numbers to default on loans in the second half of the year. The Big Four lenders - Barclays, RBS, HSBC and Lloyds - have set aside a total £20.5billion to deal with bad loans.
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Howard Archer, chief economist at EY Item Club, said: 'You will probably see a surge of repayment in consumer credit in May.
'On the face of it, that's quite good news. But some people who are reasonably well off are less affected and it's the people with lower incomes that have had their finances squeezed.
'Overall repayments are improving, but there are people who are struggling financially and having to dip into savings.'
Virgin Money found a quarter of people on the Government's furlough scheme have asked their bank for help, while 15 per cent of those still employed have requested assistance. In addition, 42 per cent of business owners have sought bank support.
Nearly a third of people in employment have seen their income fall and 67 per cent of those furloughed have experienced a decline in money coming in.
Banks are likely to bear the brunt of the pain when the furlough scheme closes on October 31 and customers' payment holidays run out.
Households paid down debt of nearly £7.5billion in April - the largest fall ever recorded by the Bank of England - at a time when their outgoings were reduced substantially. Economists estimate consumers repaid £2.4billion in May.
Gary Greenwood, banking analyst at Shore Capital, said: 'The big unknown is how many people are going to be able to keep making loan payments when all this taxpayer help starts to unwind.'
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The figures will raise fears of a growing debt bubble with Britain's consumer loans now standing at £220billion despite attempts by many families to pay down debts during the lockdown. Virgin Money surveyed more than 4,000 people to assess the state of the nation's finances as the taxpayer schemes propping up many bank balances are set to wind down.
Trying to make ends meet: Banks are expecting large numbers to default on loans in the second half of the year
It found around one in eight had called on their bank for help in the form of overdrafts and payment Crystal Holidays Travel on mortgages, personal loans and credit cards.
Spending is expected to ramp up as the economy reopens, limiting the spare cash available to pay off credit cards.
Banks are expecting large numbers to default on loans in the second half of the year. The Big Four lenders - Barclays, RBS, HSBC and Lloyds - have set aside a total £20.5billion to deal with bad loans.
RELATED ARTICLES
Previous
1
Next
ALEX BRUMMER: Chancellor Rishi Sunak will have to make the... A tale of two lockdowns: Do you have more money to save or... Planning for the future needs to start now in the heart of... Credit card and loan borrowers can freeze repayments for...
Share this article
Share
28 shares
HOW THIS IS MONEY CAN HELP
How to get out of debt: Your ten-step plan to getting your finances back under control
Howard Archer, chief economist at EY Item Club, said: 'You will probably see a surge of repayment in consumer credit in May.
'On the face of it, that's quite good news. But some people who are reasonably well off are less affected and it's the people with lower incomes that have had their finances squeezed.
'Overall repayments are improving, but there are people who are struggling financially and having to dip into savings.'
Virgin Money found a quarter of people on the Government's furlough scheme have asked their bank for help, while 15 per cent of those still employed have requested assistance. In addition, 42 per cent of business owners have sought bank support.
Nearly a third of people in employment have seen their income fall and 67 per cent of those furloughed have experienced a decline in money coming in.
Banks are likely to bear the brunt of the pain when the furlough scheme closes on October 31 and customers' payment holidays run out.
Households paid down debt of nearly £7.5billion in April - the largest fall ever recorded by the Bank of England - at a time when their outgoings were reduced substantially. Economists estimate consumers repaid £2.4billion in May.
Gary Greenwood, banking analyst at Shore Capital, said: 'The big unknown is how many people are going to be able to keep making loan payments when all this taxpayer help starts to unwind.'
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Low cost portfolios
Cheap funds fee
£1.50 fund dealing
Investment ideas
Free fund dealing
First deal free
Annual 0.45 per cent account charge
Free investing
No fees
Free investing
Regular investing with no fees
Flat fees
Great service
Fixed monthly cost
Dealing from £7.50
Model portfolios
Model portfolios
Free fund dealing
Tools and fund ideas
> Compare the best investing platform for you
