How borrowing differs between the UK and US

Why we’re just not the same when it comes to debt

There are many ways in which UK and US consumers are very similar these days. From the increase in online shopping habits, to prioritising spending on holidays and Christmas presents we have plenty in common. However, when it comes to debt this is where the UK and US populations part ways, not just in terms of attitude but in how debts are handled and borrowed too whether the debt is on home loans, credit cards, bad credit loans or personal loans).

American attitudes to borrowing are much more open

A survey by VisualDNA confirmed some very interesting facts about the American approach to borrowing.

  • Americans are more likely to borrow than Brits
  • If you live in the US then you’re much more likely to be comfortable with spending money that you don’t have
  • Americans require less convincing when it comes to making purchases and are more likely to use debt to do it if necessary
  • Americans are five times more likely to be self confident, which is believed to be one of the reasons why they are happier to make bold borrowing decisions

UK attitudes to borrowing are not quite so optimistic

If you’re a borrowing Brit then you’re going to be affected by the following processes, according to the VisualDNA

  • A lower threshold for failure – Brits are less willing to borrow than Americans in case it just doesn’t work out and the debt can’t be repaid, although guarantor loans are increasingly popular where a family member can provide backup to repay a debt.
  • Less appetite for risk – Britons are much more risk averse when it comes to personal borrowing than borrowers in America, both with respect to the amounts borrowed and whether or not to borrow in the first place
  • UK consumers and businesses tend to be more pessimistic – some put this down to the fact that the UK will never experience the same highs as the US economy has had
  • Brits are more pragmatic and need more convincing to make a purchase. If they’re going to borrow money then, on the whole, there needs to be a good reason for it.

But what about the realities?

  • According to personal finance company NerdWallet the average credit card debt in the US is roughly £12,500. In the UK the average credit card debit is £2,504.
  • NerdWallet also found that the average total debt per household in the US is the equivalent of £104,280. In the UK, the average debt per household is £56,632.
  • In the UK, average consumer credit borrowing sits somewhere around £3,909 per UK adult. In the US, according to TransUnion, the average balance on a personal loan in the US by the end of 2017 will be $8,000 (roughly £6,200).
  • When it comes to debt problems there are some startling differences too. In the UK, 3,321 County Court Judgments are issued every day against those with outstanding debts that they cannot pay and 15 properties are repossessed every day. For April 2017, the number of US foreclosures (repossessions) according to RealtyTrac was just under 80,000.

UK statistics all from The Money Charity.