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Borrowers have managed to wipe around a third off what they owe on their non-mortgage debts on average over the past year, according to a credit checking company.
With fewer opportunities to spend, people’s outstanding balances on credit cards and loans have shrunk by 32% or £3,764 typically during the year of coronavirus lockdowns, Experian found.
Experian CreditExpert customers had an average credit balance across all accounts, excluding mortgages, of £7,851 in March 2021.
This was down from £11,615 in March 2020.
Debts have continued to reduce since June last year, when credit balances averaged £9,681, Experian said.
It is likely that the reduction was driven by fewer opportunities to spend on non-essential items and lower transport costs as a result of the restrictions, it suggested.
It said another factor has been changes in credit availability, as lenders have adapted their offers.
Lenders have become more cautious in the tough economy, but some have been returning to the market with new offers and customer eligibility for credit has increased accordingly.
James Jones, head of consumer affairs at Experian said: “It’s encouraging that borrowers have managed to reduce the balances on their credit cards and loans, with lockdown impacting day-to-day spending and saving habits.
“As a result, many have improved their credit score and financial position more generally.
“The supply of affordable credit has also improved significantly, so people now have more options if they’re looking to reduce interest rates on their existing debts.”
He encouraged anyone paying unnecessary interest on outstanding credit balances to compare their options and check their eligibility.
Mr Jones added: “While some people have been able to improve their financial position, we know many have struggled, especially where incomes have been hit.
“Our advice to people with money worries is to seek support and contact their lenders without delay.
“The sooner there’s a plan in place, the sooner you’ll be back in control of your finances.”
The findings were based on Experian’s CreditExpert subscription customers’ data between March 23 2020 and March 25 2021.