London Daily

Focus on the big picture.
Wednesday, Jan 07, 2026

Debt avoided by cutbacks on dining out and clothes, banks' data shows

Debt avoided by cutbacks on dining out and clothes, banks' data shows

Consumers have developed money-saving shopping habits to help stave off problem debt as the cost of living has soared, according to banks.

People have cut back on non-essential spending on things like clothes and dining out, data from UK debit and credit card transactions suggested.

But those on low-incomes, already under financial stress, often face problems such as falling behind on energy bills.

Advisers say some are too frightened to open letters fearing demands inside.

Dame Clare Moriarty, chief executive of Citizens Advice, said that, for these people, the "cost of living crisis is turning into a debt crisis".


Record food bank referrals


Two broad camps have emerged among consumers as prices and bills have soared over the winter, although everyone's financial situation is different.

Banks say that millions of people had built up a savings buffer during Covid lockdowns and have kept their jobs, which had helped to accommodate the rising cost of living. They have also cut back on various elements of spending to help their situation.

The second group do not have that luxury and, although they may be working, could have already been in financial difficulty.

Citizens Advice said it saw more of its clients in January requiring food bank referrals and charitable support than ever before.


Discount buys


Among those with some savings and a higher income, changing habits have helped to keep debt down. Banks say arrears on loans and credit cards have remained relatively stable.

"Most of our customer base is demonstrating a healthy level of financial resilience," said Matt Hammerstein, chief executive of Barclays UK.

"Those fortunate enough to have built up a buffer have been able to accommodate rising living costs more comfortably, with many making reasonable lifestyle adjustments to stay ahead."

Those adjustments, according to Barclays, include:

*  The majority of people cutting down on discretionary card spending on things like clothing

*  People searching for discounts on entertainment

*  The rising popularity of "dupes" which are lower-priced alternatives to popular products

Barclays said its data covered around half of UK debit and credit card transactions, but the comparisons with a year ago were affected by a post-Omicron boost in some sectors 12 months ago.

Its conclusions were backed up in a report by banking trade body UK Finance reviewing the final three months of last year.

"Overall spending on credit and debit cards held up. But changes in patterns of spending within this indicate a shift away from luxuries towards essentials and cheaper options, as cost-of-living pressures bear down," it said.

Essential spending has risen faster, but the data suggests a significant proportion of shoppers are seeking out budget and value range groceries and shopping in a variety of supermarkets to make the most of deals.

Anne (left) and Retee have been helping people deal with financial worries


The rising cost of food and energy is having a significant impact on the finances of a swathe of lower-income families.

Some of those will be using a prepayment meter for their gas and electricity. Citizens Advice said the number of its clients who said they could not afford to top up their prepayment meter in January was the highest month on record.

The number of clients struggling with debts with their energy provider has risen, and the typical level of that debt has been increasing sharply.


Courage needed


Those on the front line of advice said issues with utility bills had become more common.

Debt Free Advice, a partnership of 16 charities, has been touring London over the winter with advisers giving impromptu guidance from the back of a bus funded by the Mayor of London.

On one of these trips, Retee - one of the money coaches - told the BBC that many people needed reassurance that they were not alone in difficult circumstances.

"I always see our clients as very courageous people. It takes a lot of courage to say you need help. Some are shy or feel ashamed," she said.

"Some people are in a dire situation. They have sleepless nights. They can't really cope and do not know how to get out of the situation they are in.

"They are choosing whether to heat their home or to have a meal with their children."

She said some people came in with unopened letters owing to the "fear of what is inside those letters".

Retee, who switched from work in hospitality to money advice during lockdown, had been conducting assessments then sending people on to specialist advice.


Tackling It Together: How to deal with looming debt

*  Talk to someone. You are not alone and there is help available. A trained debt adviser can talk you through the options. Here are some organisations to get in touch with.

*  Take control. Citizens Advice suggest you work out how much you owe, who to, which debts are the most urgent and how much you need to pay each month.

*  Ask for a payment plan. Energy suppliers, for example, must give you a chance to clear your debt before taking any action to recover the money

*  Check you're getting the right money. Use the independent MoneyHelper website or benefits calculators run by Policy in Practice and charities Entitledto and Turn2us

*  Ask for breathing space. If you're receiving debt advice in England and Wales you can apply for a break to shield you from further interest and charges for up to 60 days.

Matt Dronfield, managing director of Debt Free Advice, said advisers spoke 33 languages between them and often helped people negotiate with creditors as well as apply for grants and benefits.

About 60% of those who were helped were women, he said, and there was a particular focus on those from an minority ethnic background.

Traditionally, a stigma surrounded debt, he said, with some people more likely to talk to their pet than their partner about money issues.

"Talking to someone is the first step. We show there is someone on their side, perhaps for the first time, so they can start to see a future," he said.

Newsletter

Related Articles

0:00
0:00
Close
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
Trump Announces U.S. Large-Scale Strike on Venezuela, Declares President Maduro and Wife Captured
Tesla Loses EV Crown to China’s BYD After Annual Deliveries Decline in 2025
UK Manufacturing Growth Reaches 15-Month Peak as Output and Orders Improve in December
Beijing Threatened to Scrap UK–China Trade Talks After British Minister’s Taiwan Visit
Newly Released Files Reveal Tony Blair Pressured Officials Over Iraq Death Case Involving UK Soldiers
Top Stocks and Themes to Watch in 2026 as Markets Enter New Year with Fresh Momentum
No UK Curfew Ordered as Deepfake TikTok Falsely Attributes Decree to Prime Minister Starmer
Europe’s Largest Defence Groups Set to Return Nearly Five Billion Dollars to Shareholders in Twenty Twenty-Five
Abu Dhabi ‘Capital of Capital’: How Abu Dhabi Rose as a Sovereign Wealth Power
Diamonds Are Powering a New Quantum Revolution
Trump Threatens Strikes Against Iran if Nuclear Programme Is Restarted
Apple Escalates Legal Fight by Appealing £1.5 Billion UK Ruling Over App Store Fees
UK Debt Levels Sit Mid-Range Among Advanced Economies Despite Rising Pressures
UK Plans Royal Diplomacy with King Charles and Prince William to Reinvigorate Trade Talks with US
King Charles and Prince William Poised for Separate 2026 US Visits to Reinforce UK-US Trade and Diplomatic Ties
Apple Moves to Appeal UK Ruling Ordering £1.5 Billion in Customer Overcharge Damages
King Charles’s 2025 Christmas Message Tops UK Television Ratings on Christmas Day
The Battle Over the Internet Explodes: The United States Bars European Officials and Ignites a Diplomatic Crisis
Princesses Beatrice and Eugenie Join Royal Family at Sandringham Christmas Service
Fine Wine Investors Find Little Cheer in Third Year of Falls
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
×