Two-thirds (67%) of UK credit users agree cost-of-living pressures have increased the use of credit in everyday spending, with new research from Zilch, the intelligent payments platform with nearly six million customers, revealing they are doing so with greater intentionality than ever before.  

The finding comes from the Credit Confidence Study, Zilch's new study of over 10,000 UK adults and over 6,600 users of credit conducted by YouGov. Over half (52%) of credit users say they use credit primarily as a financial tool, compared to just 19% who rely on it out of necessity, a shift that is most visible in how and why people use credit for everyday spending. 

Credit is no longer reserved for big purchases. More than a third of UK credit users (36%) use it for clothing and a third (33%) for their weekly food shop, with fuel (28%) and dining out/takeaways (29%) not far behind. But the most revealing finding is the reason why. Of those using credit for their weekly food shop, 44% say the primary motivation is to earn rewards or points, compared to just 23% who say it's a necessity. The same pattern holds for fuel (47% rewards vs 17% necessity) and dining out/takeaways (43% rewards vs 14% necessity).  

Far from being a financial lifeline, credit has become a tool millions of Brits are actively using to get more value from the money they spend every day. 

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Credit use is becoming more strategic, but a knowledge gap is emerging 

As consumers increasingly use credit as a sophisticated financial tool, 84% of consumers say they feel confident managing their use of credit. However, there is a persistent knowledge gap emerging that undermines this self-assurance. Almost a third (32%) say credit agreements are difficult to understand and over a quarter (27%) say they don’t know how long it would take to repay their balances if they only made minimum payments each month. 

The research also highlights a disparity amongst age groups and gender. Women are more likely to find credit agreements difficult to understand (36%), compared to 28% of men. Similarly, despite 18 to 34-year-olds being the highest-growth credit demographic (26% compared to 15% for those 35 to 54), 36% have difficulty understanding credit agreements.  

A result of traditional credit models being built for a different era 

Many of the products that still dominate the UK credit market were designed for outdated consumer behaviours, and don’t help consumers manage, understand and enhance their everyday use of credit. 

Consumers want credit to be more than just a transactional lending product. Around a quarter (28%) say that credit products should simply provide access to borrowing, while almost half (47%) say they should help managing spending, 45% expect rewards and savings, and 36% say credit should help to build financial confidence.  

These evolving expectations move credit from being a product designed for its traditional use of larger-scale borrowing and as a last resort, to a tool that needs to finance, optimise and reward different kinds of transactions. 

A better alternative that aligns with consumer behaviour 

Despite their efforts and ambition to use credit in a meaningful way, only 10% say that using credit makes them feel empowered and in control. Consumers are clear about what better looks like, along with low interest rates (51%) and cashback on purchases (47%), flexible payment options (32%), membership and reward options (27%), and discounts at partner retailers (24%) are outlined as the features most likely to drive adoption of a new credit product. 

Philip Belamant, Co-Founder and CEO, Zilch, said: “How we use credit has changed. It’s no longer something people use occasionally for big purchases and as a final option, but a tool that millions of people are attempting to use strategically to get more value from their spending. While the market has broadly accepted this expanded role for credit, it hasn’t been revolutionised yet and too many products are still built for borrower habits that no longer serve the majority of credit users. 

“At Zilch, we’ve built our platform around how people actually spend today. It’s one place to manage your spending, giving you flexible ways to pay and rewards in real-time, with embedded smart tools that simplify decisions and keep you in control. With almost six million customers, many of whom use Zilch every day, our model is testament to what can be achieved when credit is designed with the consumer front of mind.”