Three quarters of households struggling to pay off their monthly credit card balance

Households with children at home are struggling with their monthly credit card repayments according to Compare the Market’s latest Money Action Index.

The research reveals that households with children at home have been finding it difficult to manage their finances in the past six months as most have seen their regular bills increase. More than eight in ten (85%) say they are paying more for energy, 61% are paying more for council tax, and 44% are paying more for car insurance. Seven in ten (70%) are now worried abouthigher food prices in the next year and 66% worry about winter energy bills. 

Due to the increasing cost of living, many households have been forced to borrow to cover regular outgoings. Of the households that use credit cards, 76% struggled to repay their monthly credit card in the past six months. This includes 32% who struggled to repay the balance every month. More than half of those who struggled (54%) stated this was due to the rising cost of everyday expenditure, such as food shopping and fuel. Three in ten households (30%) with children at home have also been lent or given money from their parents to help with bills in the past month. These households received an average of £266 from their parents.

However, more than half of households (55%) with children at home who are worried about rising costs have not taken steps to bolster their finances. Only 37% of these households have taken action to save money, which is an improvement from October 2022 when 63% of these households had not tried to improve their finances, despite costs continuing to rise. Of the households that improved their finances, 69% cut back on spending, 62% used less energy to keep their bills down, and 59% shopped at cheaper supermarkets. More than four in ten (44%) reduced spending such as hobbies and holidays and 26% switched providers where they can for household bills.
 
Ursula Gibbs, Director at Compare the Market, said “Rising costs are a concern for millions of households across the UK, with many struggling to afford their regular bills. As we head into winter, higher energy bills are a major worry. Lots of families with children at home are now having to rely on credit card borrowing for additional financial support. During this difficult time, people must take the time to look for savings wherever they can and make sure they don’t pay more than they need to. Most households could save hundreds of pounds by shopping around for cheaper deals on their bills, such as car and home insurance, broadband, and credit cards.”