Families with children at home during the coronavirus lockdown are turning to payment holidays to help them through the crisis. According to comparethemarket.com’s Household Financial Confidence Tracker, fewer than one in ten (9%) households without children at home say they have taken a payment holiday, but this figure leaps to over a fifth (21%) among families with children at home.
Among this group, over one in ten (11%) say they have had to ask for a freeze on credit card bills and/or personal loans payments. Other common debt freezes include household bills (11%), such as energy, water, motor or home insurance, along with mortgage (6%), council tax (4%) or rent payment deferrals (4%).
On top of requesting payment holidays, (11%) of families with children at home say they have taken out additional debt in the form of credit cards or personal loans in order to manage their household finances during the pandemic.
Over a quarter (26%) of families with children struggled to pay their bills over the past seven days, up from 23% last week. This compares to 15% of households without children at home. Nearly a third (30%) of families with children think the economic hit from COVID-19 will force them to cut back or make sacrifices for 6-12 months after the lockdown ends, compared to 19% of households without children at home.
The proportion of households nationwide who said that their working circumstances have changed for the worse is once again increasing. When asked why they were not confident that they would be able to pay or manage household bills over the coming weeks, over four in ten (41%) said that it was because their employment status had changed for the worse, for example they had been furloughed, received a pay cut or lost their job. This is a rise from 37% last week and reflects wider national concerns around unemployment levels once the government’s furlough scheme unwinds.
The figure is more pronounced amongst young people, with 59% of 18-24 year olds reporting a negative change to their employment status. Nearly half (48%) of this age group said that their income is not enough to cover their outgoings at the moment and a quarter (25%) have recently had to dip into savings to tide them over financially.
Anna McEntee, product director at comparethemarket.com said “These figures will spark concern that families with children are at a higher risk of taking on unsustainable amounts of debt as the economic impact of the pandemic hits their finances, especially as many payment freeze periods are now coming to an end.”
“The government – and indeed many financial services companies – have done a huge amount to help households financially during this difficult time. However, the combination of deferred payments and additional borrowing which will need to be paid back could cause problems for many families over the coming months. If interest accrues on these debts, households may be faced with hefty bills they were not expecting. It is important to only make use of payment holidays on mortgages and other household bills if you absolutely have to.”
With the UK economy and household finances currently taking a hit due to the ongoing COVID-19 crisis, how confident, if at all, are you in being able to meet the demands of / pay your household bills over the coming weeks?
|NET NOT CONFIDENT||Week 5||Week 6||Percentage point change|
|Yorkshire & Humberside||21%||17%||-4|