Debt warning: Households borrowing up to £715 to pay for the rising cost of living
Households are increasingly finding it difficult to make ends meet due to the continuing cost of living crisis.
Experts are warning of the dangers posed by falling into debt as a result of soaring bills. Research carried out by Tesco Bank found that people are borrowing as much as £715 to cover the cost of living.
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A survey conducted by the financial institution found that a quarter of adults have borrowed money in the last six months, either from loved ones or their bank.
This rises to just over half of 18 to 34-year-olds who have fallen into borrowing or getting into debt over the same period.
According to Tesco Bank, Britons have borrowed an average of £674 to cover regular monthly bills.
However, this figure increases by an average of £715 when taking into account covering hobbies and days out.
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The bank’s survey highlighted that 39 percent of consumers in the UK who have taken out a personal loan in the last half a decade blamed the cost of living crisis.
A third of those polled said it was easy to slip into owing money and 31 percent said they believe there should be more awareness around debt issues.
Despite this, 23 percent of respondents shared that they would feel shame and embarrassment by getting into debt.
Furthermore, 18 percent of Britons said that they would never confess to anyone that they were in struggling with debt or other money issues.
Partly exacerbating the crisis over rising debt are schemes such as Buy Now Pay Later (BNPL).
Those who choose to purchase items through this payment method are able to pay off costs over a set period of time.
Usually, people do not need to pay any interest or charges on the amount they have borrowed as long as they keep to their repayment agreement.
However, experts are warning that participants in Buy Now Pay Later are “getting themselves in debt” due to being unaware of how the scheme works.
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Speaking exclusively to Express.co.uk, Craig Wilson, the managing director of private sector at Sopra Steria UK, outlined why these schemes are potentially an issue for low-income households.
He explained: “The number of people turning to schemes such as Buy Now Pay Later (BNPL) has soared in recent months.
“This will likely continue as the rising cost of living leaves many struggling to afford necessities and turning to unsustainable credit schemes as a result.
“Despite usage increasing, many consumers don’t understand how these schemes truly work, or that they’re getting themselves into debt in the first place.”
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In light of this, the debt expert is calling for more accountability from businesses that profit from pushing people into debt.
Mr Wilson added: “BNPL platforms, therefore, have a responsibility to educate consumers on the terms and conditions they’re agreeing to, and the potential consequences of using these services.
“With many people experiencing financial difficulty, it’s also vital for financial service providers to educate consumers on the types of support available and improve access to services for the most vulnerable.”
