One in three struggling to meet their financial commitments across Britain
The cost of living has risen sharply in recent months
Last updated 20th Jan 2022
The number of people finding it hard to keep up with bills and credit commitments has doubled since the start of the pandemic according to research done by a debt charity, StepChange,
30% of people are unable to pay back debt that’s a huge increase from 15% ( 7.5 million) people in March 2020, according to a survey for StepChange.
The findings are part of a new report by the charity –“ Falling Behind to Keep Up: The Credit Safety Net and Problem Debt” which reveals that the pandemic has further entrenched the use of consumer credit to make ends meet.
The research found that:
Around 8.6 million people in financial difficulty borrowed £26 billion to cover their basic needs in the last year
Two thirds of those in difficulty (65%) had kept up with credit repayments by missing bills, borrowing from family and friends or cutting back to the point of hardship.
3.5 million people used credit to pay essential bills
Fewer than one in four of those struggling with credit repayments were in contact with their bank or credit firm despite rules designed to ensure those in financial difficulty received support.
Half of those polled (53%) said they would be reluctant to seek help with financial difficulty from a bank or credit firm due to concerns about credit reporting and the anxiety and stigma around the issue.
51% had interest added to an existing debt
The findings from StepChange clients, revealed “poor practice” in the credit market such as ineffective affordability checks and automatic credit limit increases that drew financially vulnerable households into unmanageable debt.
StepChange is also urging the Government and the FCA The Financial Conduct Authority.
to do more to provide alternatives to borrowing for households that are struggling to meet unexpected expenses, through grants and a Government-supported no-interest loan scheme.
StepChange chief executive Phil Andrew said:
“The sharp rise in the number of people struggling to meet their financial commitments should raise alarm bells across Government, banks and regulators."