GFT's latest Banking Disruption Index
highlights mounting debt worries for UK consumers
LONDON, June 24,
2024 /PRNewswire/ -- British consumers on average are
almost £2,700 in credit card debt, and more than a
third either already have or contemplated taking out a payday or
short-term loan to cover rising debt costs in the last 12
months, according to new research.
The increased cost of living and high inflation means Brits
are struggling to stay on top of their finances, with 39%
admitting to not having any method of tracking their spending.
This data comes from GFT's latest Banking Disruption
Index, a bi-annual assessment of consumer banking habits.
Richard Kalas, Client
Solutions Director, Retail Banking at GFT UK, said, "This
mounting debt is understandably becoming a real concern for
consumers. We know banks have introduced entire packages of support
to help people manage their finances over the last couple of years,
but it's clear customers aren't aware of them. There's a huge
opportunity here for banks to better demonstrate the help they can
offer and become trusted partners to their customers."
The research also uncovered growing reliance on credit
facilities to cover everyday spending. In fact, consumers with a
credit card are using it almost twice a week, with almost a
third (32%) of those using it for basic expenses such as
groceries.
When it comes to debt management, a quarter (25%) of
35-44-year-olds have opened other lines of credit to pay off
and consolidate their finances.
Worryingly, however, 18% of people do not currently know what
the repayment terms or APR of their credit card(s) are.
But it's not just credit card debt that's rising; an
overreliance on overdraft facilities is growing too. 45% of
those surveyed are using their overdraft before the end of the
month, and one in four are falling into an unarranged overdraft
facility, incurring significant charges.
Despite these debts, most people aren't concerned about using
their overdraft facilities, with almost half (47%) considering
credit card debt to be far more serious.
Support from banks
Overall, banks have increased their support for customers since
the cost of living crisis hit, with dedicated packages to help
people facing financial difficulty. But the research shows
consumers want more.
In fact, nearly a third (32%) of customers are currently unsure
what products and services their bank offers to help them with
their money. And a further 14% would like specific support to
help them manage their credit card and overdraft
debts.
As such, an increasing number of people are turning to budgeting
apps and buy-now-pay-later (BNPL) facilities to manage their
spending, with one in five (20%) of 18-24-year-olds using BNPL
services to ease financial challenges.
This press release is also available for download via
the GFT newsroom
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