Young increasingly rely on credit
Over the past year, 6% of 18-34 year olds have had to use their credit card or overdraft to tide them over, some putting themselves at risk of extra fees and interest charges by using expensive forms of credit.
More than one in ten 18-34 year olds admitted they have had to use a credit card to make cash withdrawals, 7% said they had taken out a pay day loan and one in six had used an unauthorised overdraft – all of which risk high fees and interest charges.
Kevin Mountford, head of banking at MoneySupermarket said: “When used responsibly, credit can be a good thing and can be an effective way for people to manage their finances.
“Using a credit card for everyday expenditure but then paying it off in full at the end of the month, for example, would not cost a penny in interest, and there are cards specifically designed for purchasing… allowing you to spread the cost of larger purchases over the length of the deal.
“It’s essential those using credit are clued up on all the payments and charges involved when relying on a credit card or overdraft- research your options.
“It’s worrying that such a high number of those aged 18-34 have been tempted to use an unauthorised overdraft or credit card for cash withdrawals- the charges and fees for doing so can be sky high.
“It is also essential to avoid missing or making a late payment, which could be a costly move and vitally, could damage your credit rating making it more difficult to access other financial products in the future.
Despite the increased number of young people relying on expensive forms of credit, there is also an increase in the number of those putting regular amounts in savings. A fifth of 18-34 year olds who have saved in the past year cite realising the importance of putting money away as the reason for saving.