Prepayment customers twice as likely to go into debt

Households with energy prepayment meters in their homes are nearly twice as likely to dip into debt due to the cost of living crisis than others, according to new data.

The Office for National Statistics (ONS) found that 26% of adults who pay for their gas or electricity up front, reported using credit because of increases to the cost of living. Among the rest of the population that figure was 14%. They were 2.2 times more likely than those aged 75 or over to fall into that category.

It found that 34% of this age group said they had started to borrow more money or use more credit than usual when compared to a year ago. Only 7% of those over 75 said the same.

The research also found that renters were 4.4 times more likely than those who own their home outright to be in a financially vulnerable situation

More than half of renters (55%) said they would not be able to afford an unexpected £850 spend. Just 12% of those who own their home outright said the same.

The report also found that parents and those earning less money were more likely to be financially vulnerable.

When asked what they were doing because of increases in the cost of living, around 7 in 10 (69%) adults said they were spending less on non-essentials, while 60% said they were using less fuel, such as gas or electricity in their home.