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impact of debt and credit on mental health
impact of debt and credit on mental health

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The Impact of Debt and Credit On Mental Health and Wellbeing

Many people find themselves in debt and feeling overwhelmed. Debt can lead to feelings of anxiety, stress, guilt and shame. But it’s not just the financial aspect that can take a toll on mental health.
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The weight of this financial burden, coupled with the potential impact on your credit score, can further intensify mental health challenges, even if you manage to stay on top of payments.

Having recently completed our Stability Tracker survey (Sept 2023*) we saw how close the link between financial and mental health was. 30% of UK adults stated that their mental health had deteriorated as a result of the cost of living crisis, with that percentage increasing to 48% in 18-24 year olds. This impact is so significant that nearly a quarter of the UK’s 25-34 year olds have sought mental help support to deal with their financial situation

Below, we will explore the effects of debt and credit on mental health and wellbeing. We will look at how debt-related stress can affect overall psychological wellbeing, how to manage financial issues safely and tips for improving your credit score so you can reduce financial strain. 

The relationship between debt and mental health

Debt is often seen as a source of stress and anxiety and it can harm mental health. While debt itself is not necessarily a bad thing, it can become a problem when it's unmanageable or causes financial hardship. If you're struggling to pay your debts, it's important to seek help from a qualified financial advisor or therapist who can help you develop a plan to get back on track. 

There are also many resources available online, from credit counselling agencies that can help you manage your debt and reduce your stress levels. You can also get support from a FREE debt advice service. We recommend Money Helper. They are a free service set up by the Government to help people make the most of their money.

The different types of debt and their impact on mental health

Debt and credit can have a major impact on mental health and wellbeing. There are different types of debt and each can have a different effect on mental health.

Credit cards

Credit card debt is one of the most common types of debt. It can be easy to get into credit card debt if you are not careful with your spending. Credit card debt can be stressful and can lead to anxiety and depression.

Student loans

Student loan debt is another type of debt that can be challenging to repay, often lingering for many years or even decades. This prolonged burden can exacerbate financial stress and have a profound negative impact on mental health.

Medical bills

Medical debt is another type of debt that can be difficult to repay and therefore cause significant amounts of stress and anxiety.

Gambling debt

Debt from gambling is another type of debt that can be difficult to repay. It can lead to financial stress and can negatively impact mental health.

All types of debt can hurt mental health. If you are struggling with debt, it is important to speak to a financial advisor or counsellor who can help you develop a plan to get out of debt.

Credit and its impact on mental health

Debt and credit can have a huge impact on our mental health and wellbeing. They can cause us to feel anxious and stressed. If we're struggling to keep up with our payments, it can feel like we're constantly under a lot of pressure. This can lead to us feeling overwhelmed and like we're never going to be able to get out of debt.

Credit can also affect our self-esteem. If we're constantly being rejected for credit it can make us feel like we're not good enough or that we're not worthy of financial help. This can be extremely damaging to our mental health and wellbeing.

If you're struggling with debt or credit, it's important to seek help from a professional. There are also many support groups available that can offer advice and assistance. Remember, you're not alone and there is help available.

How to manage debt and credit in a way that promotes mental health and wellbeing

Debt and credit can have a major impact on our mental health and wellbeing. It is important to manage debt and credit in a way that promotes mental health and wellbeing. 

Here are some tips:

Make a plan

When it comes to debt and credit it is important to have a plan. This plan should include how much debt you have, what your monthly payments are and how you will pay off your debt.

Set a budget 

A budget can help you keep track of your spending and make sure that you are not overspending. When it comes to debt and credit, it is important to stick to your budget so that you can stay on track with your payments.

Stay organised 

It is important to stay organised when it comes to debt and credit. Keep all of your documents in one place so that you can easily find them when you need them. This will help you keep track of your payments and make sure that you do not miss any deadlines.

Communicate with your creditors 

If you are having trouble making your payments communicate with your creditors. This way they can work with you to come up with a payment plan that works for both parties.

Ask for professional help

If you are struggling to manage your debt and credit, seek professional help from a financial advisor or counsellor. They can help you develop a plan to get out of debt and improve your financial situation.

the impact of debt and credit on wellbeing

How to Save Your Health from the Negative Impact of Credit

Credit, while being an essential financial tool, can sometimes take a toll on our health when not managed effectively. The stress from accumulating debt, managing multiple payments, and the potential for a plummeting credit score can lead to both mental and physical health concerns. Here are strategies to safeguard your health from the adverse effects of credit.

Stay Informed

Knowledge is Power: Equip yourself with knowledge about credit terms, interest rates, and any associated fees. Understanding what you're getting into can reduce anxiety.

Monitor Your Credit Score: Regularly check your credit score to ensure there are no errors and to keep tabs on your financial health.

Budget Mindfully

Set Clear Limits: Allocate specific amounts for your expenses and stick to them. This prevents overspending and reduces the need for excessive credit.

Emergency Fund: Aim to build an emergency fund. Having savings can alleviate the stress of unforeseen expenses, reducing reliance on credit.

Manage Debt Strategically

Prioritise High-Interest Debt: Pay off credit cards or loans with the highest interest rates first. This not only saves money but also brings a sense of accomplishment.

Consolidate Loans: If you have multiple debts, consider consolidating them. This can simplify payments, potentially reduce interest rates, and provide a clearer path out of debt.

Avoid Impulse Borrowing

Question Necessities: Before making any purchase on credit, ask yourself if it's a need or a want. This brief pause can save you from unnecessary debt.

Limit Credit Card Use: Use credit cards wisely. It's easy to swipe, but the interest can quickly accumulate.

Seek Professional Help

Credit Counselling: Consider seeking advice from credit counsellors or financial advisors. They can provide strategies to manage and reduce your debt.

Mental Health Professionals: If credit-related stress is overwhelming, don't hesitate to consult mental health professionals. Therapy or counselling can offer coping mechanisms.

Understand your benefits: Many benefits lay unclaimed as people are unaware of what is open to them. Use a tool such as a benefits checker which you can find in our Hub. It may identify benefits you are entitled to and could provide you with ongoing financial support.

Open Communication

Discuss with Family: Your financial decisions might impact your family. Open dialogue ensures everyone is on the same page, reducing potential conflicts and stress.

Negotiate with Lenders: If you're struggling to make payments, communicate with your lenders. They might offer solutions or restructuring options.

Stay Physically Active

Exercise: Physical activity can be a great stress reliever. Even a brief walk can clear your mind and provide a fresh perspective on financial challenges.

Practice Mindfulness and Meditation

These practices can reduce anxiety and improve mental clarity. Allocating time daily for mindfulness can help you approach credit decisions with a calm and clear mind.

Educate Yourself Continually

Attend workshops, read books, or take online courses about financial management. The more you know, the better you can navigate the world of credit without undue stress.

Avoid Late Payments

Set reminders or automate payments to avoid missing due dates. Late payments can lead to added fees, higher interest rates, and credit score reductions.


Debt and credit can have a significant impact on mental health, affecting our ability to cope with everyday life. We must take the necessary steps to ensure our financial wellbeing, such as creating an emergency fund or budgeting effectively. If you are struggling with debt or other financial issues it may be helpful to seek support from a professional who can help you create a plan for managing your finances responsibly. 

Taking control of your debt and understanding how it affects your mental health can help improve your overall wellbeing.

Additional support

If you feel like you require additional support, you may wish to get in touch with the following charities who may be able to help you:

  • NHS Live Well: for advice on health and wellbeing Rethink Mental Illness: provides phone advice & information www.rethink.org Tel: 0300 5000 927 9:30am-4pm (Mon-Fri) Email: advice@rethink.org 

  • Mind: information on mental distress, where and how to get help www.mind.org.uk Tel: 0300 123 3393 9am-6pm or Txt: 86463 Email: info@mind.org.uk 

  • C.A.L.M: Aimed specifically at men. Helplines are open 365 days of the year. Tel: (Outside London) 0800 58 58 58 (London) 0808 802 58 58 from 5pm to midnight 

  • Samaritans: Free 24-hour emotional support line if you are suicidal or in despair. Tel: 116 123 Email: jo@samaritans.org 

  • Citizens Advice: free advice on debt, benefits, employment, housing etc. Tel: (England) 03444 111 444 (Wales) 03444 77 20 20 Text: 03444 111 445 9am-5pm (Mon-Fri) 

  • Step Change: offers free and impartial debt advice & debt solutions. Tel: 0800 138 1111 8am-8pm (Mon-Fri) 8am-4pm (Sat).

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