Secret Spenders: UK Consumers Hiding Over £8.5 Billion of Debt as a Quarter Turn to Spending to Help Them Cope with Pandemic
More than one in four UK consumers (27%) are currently hiding their finances from those closest to them, with one in 10 adults concealing debt (8%) or spending in secret (12%),
The new research from TransUnion – one of the UK’s leading credit reference agencies – reveals the average hidden debt is £600 and that collectively the nation is potentially concealing over £8.5 billion[i] from their family or partner.
The survey suggests that the current pandemic restrictions have made this situation worse, with the key reasons for spending in secret including turning to retail therapy to improve mood (17%) and shopping online due to lockdown boredom (14%).
What’s more, the research suggests one in 10 (9%) are shopping to feel more in control, yet a similar number acknowledge they are spending money they don’t have (8%).
Credit card debt is the most common type being hidden (43%), and it’s more likely to be concealed by women than men (53% versus 37%). This is followed by taking on personal bank loans in secret (22%), using overdrafts (18%) or not keeping up with outstanding bills (16%).
Some people are even turning to loan sharks (15%) whilst others are becoming indebted to the same family they’re hiding their secret spending from (13%).
Kelli Fielding, TransUnion’s managing director of consumer interactive in the UK said: “Online purchases have been the cornerstone of our shopping during the pandemic so it’s really important for people to keep track of spending so they don’t overstretch themselves financially. This is particularly relevant given the most recent figures in our Financial Hardship Study which showed that the second lockdown gave rise to renewed concern, with over half (52%) of households in the UK being negatively impacted financially[ii] at the start of November.
“It’s very worrying to know that many are also hiding financial struggles from those close to them, particularly at a time like this when we’re all facing economic uncertainty, and this secret spending is likely to get worse during the festive season. No one should be afraid or embarrassed to talk openly about money worries – being honest about what’s owed and what you’re spending is essential when it comes to getting back in control of your finances.”
How to keep online shopping in check
- Stick to a monthly budget: Work out your monthly income and pay all essential outgoings in the first instance, such as mortgage or rent, utility bills and phone contract. This will give you a clear indication of how much you can budget for shopping, and can help you avoid defaulting on bills and ultimately impacting your credit score.
- Keep up with your repayments: Make sure you’re paying off any existing credit card or store card debt before taking on more. Ideally you should pay more than the minimum payment each month and pay it on time to protect your financial standing. If you’re struggling, stop and do the sums of any current repayments going out before doing any more shopping.
- Be wary of online ads: Your phone and computer use internet cookies to track the types of online shopping sites you browse, and your spending habits. From this information they are able to serve you adverts for relevant products and increase your likelihood to purchase. Be aware of this and try to decide if you really need it before clicking buy.
- Don’t be blindsided by special deals: As enticing as an offer or deal might seem, it might not always be the cheapest option on the market. Shop around and you may find something similar at a more competitive price.
Checking your credit report and score regularly is an essential part of monitoring and managing your finances. To check your TransUnion credit score and report for free visit Credit Karma, MoneySuperMarket, or TotallyMoney.
[i] 27% of UK consumers (18+) reported concealing debt/spending at an average of £600. According to latest ONS figures, the current UK adult population is 52,673,433, which means 14,221,827 consumers have concealed debt/spending at an average of £600. Collectively, this would be a sum of £8,533,096,200