Nationwide has urged individuals who are struggling financially to seek help as a “perfect storm of record New Year debt” is set to make January a difficult month for UK households.

The building society also highlighted rising energy bills and tax returns as further cause for concern in the opening month of 2025.

According to Nationwide’s spending data, debt levels in November were already 4% higher than the same month the year previously, at £696m against £672m, as more customers borrowed to cover the cost of Christmas.

Nationwide’s data has also shown that debt has been rising for several years, with the recent surge eroding positive gains made during the COVID pandemic. In January 2024, customers made debt repayments of £796m, a 43% increase when compared to January 2021 (£556m), and a 29% rise on pre-pandemic levels when £619m was repaid in January 2020.

As a result, debt in January this year is on track to be the highest since Nationwide started tracking prior to the pandemic.

In addition to rising debt, January also coincides with an increase in the energy price cap and the deadline for self-assessment tax returns, which the society has warned could “pile further pressure” on households at a time the cost of living remains high.

“December is always the peak month for spending, and many will turn to credit to fund their Christmas festivities,” Nationwide payments strategy director, Mark Nalder, commented. “Unfortunately, this means many start the New Year with more to pay back.

“With rising energy bills and annual tax returns, January could be a long month for many. This is why we traditionally see a jump in spending on holidays as people have something to look forward to.”

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