Four in five (80%) people expect to spend more on essential costs such as rent, food and bills, research by StepChange Debt Charity revealed. Almost one in three (30%) said their increased spending will be down to splashing out on holidays, events and activities.
StepChange also highlighted that one in five (22%) people who use credit are currently borrowing more than they did 12 months ago. This rises to one in three (32%) parents with children aged 18 and under.
The figures come as the charity launches a new summer campaign around credit confidence, informing billpayers about how to avoid spiralling fees and potential debt problems.
Vikki Brownridge, chief executive at StepChange Debt Charity, said: “With the summer in full swing – and people start to head off on holiday or see their expenses increase due to kids being at home – we know credit may be useful for those extra costs. However, the credit market can be complicated, between how readily available expensive credit is, to lenders offering people too much credit, there’s a real risk that those who are struggling may end up borrowing more than they can afford.
“Pressures brought on by the cost-of-living crisis are also far from over, with many still struggling to cover regular bills and credit commitments.
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“Even with interest-free credit such as Buy Now, Pay Later, not keeping on top of payments could lead to late fees and charges.”
Brownridge added that if you are worried about meeting credit repayments, it’s important not to wait to get help, speak to your lender who will offer tailored support and guidance.
“At StepChange, we offer completely free and non-judgmental debt advice, and can walk you through your options for dealing with your debt,” she said.
Checklist if you’re thinking of taking out credit
- Borrow from trusted companies
Search online for the ‘FCA register’. The company should be listed and check the small print as they should have permission to offer loans.
- Watch out for interest and fees
Find out what the ‘Annual Percentage Rate’ (APR) is. This is a rate that helps you understand the total cost of borrowing, and it takes into account the interest rate and charges. Avoid credit cards and loans with high interest rates as the amount you need to pay back can rise quickly.
- Make a budget
Paying back what you owe each month can help to build up a good credit history, showing you are a low risk to lend to. It will help to make a monthly budget so you can see what you can afford to pay back. Make sure you are covering your priorities, like your mortgage, rent, energy bills and council tax.
- Keep tabs on Buy Now, Pay Later
Buy Now, Pay Later (BNPL) spreads the cost over a longer period. There might not be interest to pay, but BNPL is still a loan. Repayments can stack up, and you can be charged high fees and interest if you fall behind.
- Help is at hand
If you need to use credit to get by until payday or if you are struggling to make repayments, seek professional debt help.
