Quick News Bit

13 million Brits are using credit cards to pay for everyday essentials such as travelling to work

0

As credit card borrowing soared to £1.2 billion in November, the highest levels since 2004, new research reveals one in four consumers – the equivalent of 13 million Brits – are relying on credit to fund everyday costs such as lunch and transport.

Almost three in 10 Brits are using it to feed themselves and their families.

With some household’s income no longer sufficient to cover monthly outgoings, one fifth of the nation are also using borrowed money to keep the lights on and pay their household bills.

Reliance on credit varied across UK regions. For example, over a third of residents in Southampton are using credit cards to pay for essential expenses, like transport costs. While almost one in three in Belfast are relying on plastic to pay for household bills, such as gas and electricity.

As reliance on credit cards grows, data shows consumers are beginning to use them at a younger age. The average person over 55 signed up to their first credit card at the age of 32. This compares to age 23 for the average 18-34-year-old – a whopping nine years difference.

Despite the marked upward trend in credit card usage, many are still unaware of how this kind of credit works. One area causing trouble for Brits includes being able to correctly define a ‘credit score’ – something almost two-fifths of the population are unable to do.

The nationwide gap in knowledge is further evidenced by the 38% of Brits that cannot correctly identify where to find their credit score rating. This is particularly apparent amongst young people, as a whopping three in five 18-34-year-olds don’t know where to access this information.

As many as 4% of Brits also think Wikipedia will tell them their credit score.

Despite knowledge gaps being expressed across a range of credit-related areas, almost two fifths of Brits would never seek help to understand credit cards and the application process. Older respondents are most likely to go it alone, with more than half of over 55s rejecting the help of others compared to just 10% of 18-34-year-olds.

Scots are most likely to accept help if it improves their knowledge of credit, while those in the North East of England are almost twice as likely to reject guidance on the topic.

Those who are open to assistance are most likely to reach out to their bank, but parents or price comparison websites are more likely to be sought out for guidance than a financial advisor or professional.

Laura Howard, Financial Expert at Forbes Advisor, that conducted the research, said: “Credit cards are a great servant but a terrible master. That’s why it’s extremely concerning that nearly a third of people are now relying on them just to buy their groceries, while a quarter are leaning on them to fund everyday costs such as travel.

“It stands to reason that, where credit cards are necessary to meet this kind of essential spending, many households will be unable to clear their monthly balance. And with the effective credit card interest rate now at 19.24% according to the latest Bank of England data, this only exasperates affordability problems for households.

“If you are late with payment, or miss one completely, this will also have a negative impact on your credit score – but, worryingly, our data also shows that 39% of Brits could not define what a credit score is and 38% don’t know where to find it.

“While living costs are rising at their fastest rate in 40 years, it’s really worth exhausting all other options before running up a balance on an interest-bearing credit card that you have no means of paying off. This should include contacting your energy supplier, mortgage lender or any other creditor you are unable to pay and asking if you can come to a payment arrangement.

“If you feel as though you are in a spiral of debt you cannot get out of, draw a line under it today by contacting a registered debt charity such as Stepchange.”

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment