Demand for debt services among Lloyds Bank customers has gone up by 30% in the first six months of the year, as the cost of living crisis takes its toll.
Three-quarters of the bank's 26 million UK customers are worried about rising prices and the impact it is having on their savings, according to research from the bank.
Charlie Nunn, the chief executive of Lloyds, said customers were trying to get a grip on their finances by consolidating their debts.
According to Nunn, eight in 10 of its customers have less than 500 savings in their current and savings accounts.
Lloyds Banking Group is considered a bellwether for the UK economy, as it is the country's largest mortgage lender.
According to the research, 20% of its customers are already cutting back on their discretionary spending to make sure they can cover the cost of essential items.
Customers are concerned, and they should be, Nunn told the BBC. We have seen some areas where there are real challenges.
About 80% of UK customers and families have less than 500 worth of savings in their current account and their savings account. They might have money elsewhere, but what we can see is less than 500. Nunn said that only 1% of customers are unable to pay their bills despite the sharp increase in customers dealing with problem debts.
In May, inflation in the UK went to a 40 year high of 9.1% and is expected to increase further this year, as high as 11%, due to the rising costs of energy, food and raw materials.
More than 1 million people were cancelling their gym memberships in the spring, and the lender reported in the spring that they were already beginning to tighten their belts.
Lloyds said last month that it would give more than 64,000 of its staff a 1,000 bonus to help them with the cost of living.
Nunn, who took over as chief executive at the banking group in August 2021, said Lloyds customers were concerned about the economy, but warned that there was a danger that the UK could be talking itself into a recession.
Nunn said that they were concerned that they are talking ourselves into the risk of too negative an outlook.
There are pockets of strength in the economy. There are significant parts of the consumers in the UK who want to spend and create that demand and we can continue to see opportunities to invest in growth. Credit card spending was up 300% on holidays, according to the group.