Bank of Mum and Dad solves personal financial crisis

18th January 2017

The bank of mum and dad are still the first port of call for people when they hit financial crisis, according to a report by Christians Against Poverty
The Charity asked 1,200 of their debt clients where they went for credit when they found themselves short.

The results show friends and family as the top source of cash (58% of respondents), closely followed by credit cards (57%) and those using their overdraft (50%) all of which the charity says are unsustainable in the longer term.

CAP’s Chief Executive Matt Barlow said: “We have known for a long time that people suffering with problem debt often feel acute isolation and this research helps to show why. True, they may not have any cash to socialise but more than that, if you owe money to friends and family, it will be affecting the very same relationships you would usually go to in times of stress. So, you’re being chased for money, you’re awake through the night, you’re unable to pay your bills and on top of that, you can’t talk about it to your nearest and dearest. It’s a horribly lonely way to live.”

The findings also highlight the different attitudes to credit across the age groups. Older clients were the least likely to ask friends and family for help. Instead, pensioners turned first to credit cards, banks, overdrafts and personal loans before asking people they knew.

Following the crackdown on the payday loan industry, the charity is pleased that the FCA has turned its attention to other forms of credit which can be high-cost, especially as this research shows that other sources of credit are more prevalent. It was only for the under 25s that payday lenders featured in the top three. This younger group were also more likely to have catalogue debt.

The survey also asked which type of credit was used for which type of debt. The findings showed that household bills are being met using credit cards, while people found it easier to ask friends and family for money to cover rent and mortgage or food.