Debt warning ahead of Amazon Prime Day

We’re warning shoppers to be cautious about overspending on Amazon Prime offers, after witnessing a rise in unsecured debt over the past 12 months.

63% of the people we support have credit card debt. While that figure has remained static over the past 12 months, the amount owed has increased by 12%, rising by £478 from £3,865 to £4,344.

Over the same period, income has also increased but not as fast (7%), meaning average credit card debt is now 2.3x a person’s income compared to 2.2x in 2023.

These figures mirror those from UK Finance, which show the total amount outstanding on the nation’s credit cards soared by nearly £5 billion over the past year, reaching more than £65 billion.

We’ve also seen a steady rise in buy now pay later (BNPL) debt, particularly among younger generations. The number of people we’re helping with BNPL debt has doubled in the past 12 months, although the average amount owed is relatively low and stable at £570 per person.

Who has credit card and BNPL debt?

There are generational, status and sex differences with both forms of debt.

Gen Z are less likely to run up credit card debt (54% v 63%), while men are more likely to spend on plastic than women (65% v 60%).

Older generations tend to avoid BNPL, with only 3% of pensioners seeking debt help having borrowed in this way.

It’s most commonly used by women, with 7.4% of female millennials and 10% of female Gen Zs choosing BNPL to cover the cost of spending.

Households with children are also more likely to use BNPL than those without (7.1% v 4.8%), while it’s also popular with single-parent households (7.9%).

Homeowners are more inclined to run up credit card debt (79%). But only 3% of those seeking help with BNPL are homeowners.

Think twice about overspending

Following these findings, we’re calling for shoppers to be cautious when it comes to spending on Amazon Prime Day offers.

According to Statista, almost one in two UK shoppers planned to spend during Amazon Prime’s two-day shopping event last year. And nearly $13bn was spent globally during the event last summer.

The call to think twice about overspending follows several reports that some of the offers during Amazon Prime Day are literally too good to be true, with some prices overinflated in the period leading up to the event, to make reductions appear larger.

Sebrina McCullough, director of external relations at Money Wellness, said: “Rising living costs have left household budgets stretched to breaking point, which is why we’re seeing increasing volumes of unsecured debt.

“We’re encouraging people to avoid getting drawn into unnecessary spending on offers during the Amazon Prime event. While it’s a great tool for bagging a bargain on something that’s a necessity, shoppers must think twice before spending on things they don’t need especially if money is tight.”