Millions relying on credit to survive

Our new report shines a light on just how many are relying on credit to cover their everyday costs.

Millions of people in Britain are stretched to their limits and have little set aside if they suffer a financial setback. Our research suggests that rising living costs, low wage growth and austerity measures have left millions stretched to the point that they are one setback away from financial disaster. With many having little savings and even less faith in the benefits system, they may feel that credit, including payday loans, represents the only available safety net.

Our new report, Life on the Edge, reveals how 15 million Brits are falling behind on bills and using credit to pay for their essential costs. Those on low and average incomes and with young families appear to be most likely to struggle.

But isn’t the economy improving?

While there are positive noises being made about the recovery we’re worried that those living on the edge aren’t prepared for the future. Potential interest rate rises and increases to essential goods and services are likely to be enough to push many into financial hardship.

Money problems don’t just hit people in the wallet either. We know that financial difficulty can also lead to problems at work, mental health issues and relationship breakdown. Every day we speak to over a thousand people and hear their stories; we know that debt can impact on every single aspect of their lives.

Using credit to survive

There’s a perception among some that people get into debt because they’ve splurged on luxury items that they can’t afford. This is rarely the case. We’re finding that many people are getting into debt just to pay their household bills and to put food on the table.

Most of our clients have built up their debts by trying to maintain a standard of living that most of us would consider the bare minimum.

What can be done?

Our Life on the Edge report doesn’t just highlight the problem. We also suggest some simple steps to that would go some way to help protect those in precarious financial situations.

There are five key areas:

1. There should be a new Government minister who takes charge of a national debt strategy.

2. Improve the help available for people in financial difficulty by bringing together creditors, utility companies, landlords and Council Tax collectors to provide a consistent level of support for those who are struggling.

3. Allow a period of breathing space for those that are facing hardship. This will reduce the number of people being pushed into the arms of the payday lenders.

4. Introduce a “living costs challenge” to ensure that the poorest in society don’t have to pay more for the same services.

5. Make sure free debt advice is available to all those that need it. We can provide that advice but we need to make sure people know that free debt advice is out there.

What to do if you’re living on the edge

If you’re one of the 15 million people that are living on the edge then don’t panic. There are practical steps you can take to reduce your chances of having debt problems:

• Take stock and build a budget
• Make sure you claim all the benefits you’re entitled to
• Cut your bills wherever you can; our utility switching tool could save you money
• If you’re not in debt then you should start to save money every month, to provide a rainy day fund
• If you’ve got debts then you should get free debt advice

More on debt:

The end of bailiffs

Huge jump in number of people struggling to pay Council Tax

Why the payday loan industry needs cleaning up now

Six dangerous ways to borrow

Logbook loans: the loan that could cost you your car