Credit, Collections & Insolvency News
A new study by Go.Compare has revealed that an estimated 6.6 million people now rely on their credit cards to pay everyday bills such as groceries and utilities.
In total, 17% said they need their card to afford their bills, with 13% stating that the cost of living crisis is the reason for this. This highlights that a substantial portion of the country now needs additional support with household costs.
The research used a combination of survey data and ONS figures to uncover how credit card holders have been coping during the cost of living crisis. In response to the results, the insurance comparison site is now sharing support channels for those in financial difficulty.
Groceries, one of the many expenses which has seen an astronomical increase in the cost of living crisis, is the bill that most have had to put on their credit card. Over half (59%) of those relying more on their card for bills said they need it for their weekly shop.
Many other bills to see a sharp rise, such as utilities, fuel and transport costs, were also among the top expenses now being paid for by credit card. Two-fifths (40%) of those relying on their credit card for their bills are now using it to pay fuel and transport costs – the second highest percentage of the expenses listed on the survey. Similarly, around a quarter (24%) said they use it more for utility bills.
A fraction of these respondents even said they have become reliant on their cards for housing costs. One in ten stated they use it for rental fees, while one in 20 said they need it for their mortgage repayments. This means 15% of these respondents rely on their credit cards just to keep a roof over their heads.
Just under a quarter (23%) of these respondents said they have started relying on their card to pay for their insurance – the fifth highest percentage on the survey. This suggests that rising bills have impacted Brits’ ability to pay for essential protection.
Some residents have turned to their cards so that they can keep enjoying leisure activities. Just over a third (34%) of those relying on their card to pay their bills said they are using it to fund their holidays. Roughly a fifth are using it for entertainment subscriptions, like TV and music streaming services.
Matt Sanders, Credit Card Expert at Go.Compare, said “It can be tempting to cut back on insurance when things get tight, but this can land you in an even worse position in the long run. So, it’s important to explore other options. You might be able to reduce your premiums by removing unnecessary add-ons, comparing policies, or increasing your voluntary excess, although this could cost you more if you claim.
“If you’re struggling to keep up with credit card repayments, your first port of call should be to see if you can get a balance transfer onto a card with a lower APR. They often offer 0% rates for an introductory period, so it’s a good opportunity to clear your debt if you can pay it off before this ends, but they also usually charge a fee for making the transfer. They might also offer to reduce, waive or cancel interest and charges, or pause your payments.
“This means it’ll take longer to pay off and can affect your ability to obtain credit in the future, but it could stop things from piling up. A debt consolidation loan could also help you pay off what you owe, as it can work out cheaper if the loan offers a lower interest rate than your cards. This can also involve up-front costs and could lead to more debt if you can’t pay it off.
“All of these options have their pros and cons, so you need to weigh up which one is best for you. If you’re worried about your credit card repayments, agencies like StepChange and the National Debt Helpline provide support with things like budget management plans. Citizens Advice can also help you find support if you are struggling with day-to-day living costs.”
Credit card expenses (by those relying on their card to pay bills)
Grocery shopping – 59%
Fuel or other transport costs – 40%
Holidays – 34%
Utilities (inc. gas, electricity and water) – 24%
Insurance – 23%
TV/music/streaming subscriptions – 19%
Mobile phone bill – 14%
Council tax – 13%
Rent – 10%
Broadband – 9%
Charity donations – 8%
Mortgage repayments – 5%