An estimated 2.4 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the month to 12 January.
This is a sharp rise from the estimated 1.8 million households who missed payments in the month to 8 December, according to the latest Which? Consumer Insight Tracker.
It said this volatility in missed payment rates around the Christmas period was also seen in previous years – possibly reflecting abnormal spending patterns over the festive period.
Renters more in danger of missing payments
The consumer champion noted that missed payments were particularly high among renters – with almost one in six (16 per cent) admitting to missing at least one rent, loan, credit card or bill payment in the month to 12 January.
But a significant number of mortgage holders (6.8 per cent) also missed essential payments in the period as the Bank of England base rate remains high.
Meanwhile, 2.8 per cent of outright owners missed an essential payment.
When Which? drilled down into the data, it found of the 200 Universal Credit recipients in the sample, a quarter reported defaulting on a payment.
Bills were the most common type of payments for households to miss (5.1 per cent), followed by loan or credit card payments (4.4 per cent) and then housing payments (2.7 per cent).
Of those who missed a household bill payment, the most common bill type missed was an energy bill (56 per cent). Other commonly missed bill payments were council tax (36 per cent), water (30 per cent), phone (29 per cent) and broadband and/or TV package (29 per cent).
Adjustments to cover essential bills
Six in ten households (16.5 million in total) reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month.
Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing money.
One woman from South East England told Which? that “everyday is stressful”.
“We worry about money constantly. [We] rarely use the heating … We are not living, we are existing at this point. No holidays, no luxuries, just stress and worry.”
Another man from Eastern England, said: “It is causing major stress and depression. I have totally lost my social life.”
One West Midlands resident, said: “I only have one meal a day, I don’t put the heating on and I limit myself to no longer than seven minute showers and only three a week.”
Consumer confidence see-saw
Consumer confidence in current household finances fell slightly this month to +13, down from +17 last month and +21 in September. Which? said household confidence has steadily declined throughout the cost-of-living crisis.
However, consumers’ confidence in the future of the economy and their future household situation rose slightly – with people giving the recent cuts to National Insurance and anticipated increases in their wages and state pension as reasons for optimism.
Consumer confidence in their future household situation rose from -14 last month to -6 in the month to 12 January and confidence in the future UK economy increased to -26 from -35 last month.
But, the majority of people still think these measures will get worse over the next 12 months. One in five think the UK economy will get better over the next 12 months, while almost half (48%) believe it will get worse. For future household finances, just a quarter (24%) think theirs will get better and three in 10 (30%) believe theirs will worsen.
Which? said that with high interest rates, households are likely to continue to face financial pressures throughout 2024. As such, it is calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help people struggling to make ends meet and ensure they are providing value for money.
Rocio Concha, Which? director of policy and advocacy, said: “It’s very worrying that missed payment levels are still so high. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their landlord for help.
“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
