Pexels /Mikhail Nilov
Cost of living crisis: Consumers struggling to make minimum credit card payments
Concerned about the coming impact of inflation and interest rate increases, people in the UK are turning to credit cards and BNPL, but one in two can't keep up.
From the pandemic to the cost-of-living crisis, consumers have been pushed from one financial worry to another.
Now, rising costs are pushing more into credit that they can't afford to service.
Nearly half (48 per cent) of UK consumers are struggling to make minimum monthly payments on their credit cards owing to the mounting cost of living, according to a survey.
The research, which comes from a 1,025- person survey conducted on behalf of card issuing fintech, suggests people are increasingly concerned about inflation and interest rate increases and are turning to credit cards and BNPL credit.
A higher number (57 per cent) of those surveyed said they are relying on credit to make ends meet.
The research also finds that UK consumers’ concerns around inflation and cost-of-living are affecting their spending decisions. Almost three-quarters (73 per cent) of those surveyed said they plan on reducing their spending, while 54 per cent surveyed have been forced to delay making a major purchase on credit due to their current concerns.
The picture is worse for younger people.
Gen Z consumers are even more reliant on credit and 68 per cent of those surveyed aged 18-25 report using credit cards to get by.
More than half (56 per cent) of consumers surveyed have increased their use of BNPL solutions over the last 12 months, with this figure rising to almost two-thirds (63 pe cent) among Gen Z surveyed.
“UK households are fighting against the rising tide of the cost-of-living crisis, but credit and smart budgeting can help them stay afloat,” commented Anna Porra, European Strategy Director at Marqeta.
“With the energy price cap set to rise again in October, consumers’ financial concerns may very likely get worse. It’s becoming critical that banks offer flexible credit options, smart budgeting options, and better insight into spending to throw struggling households a lifeline. Developing personalised, user-friendly lending options that help consumers to navigate rising prices is crucial for banks that want to stay ‘top of wallet’.”