UK Consumers Struggling with Cost-of-living and Inflation, as Almost Half Report Finding it Harder to Make Minimum Monthly Credit Card Payments

  • Personal Finance
  • 22.09.2022 10:20 am

Marqeta, the global modern card issuing platform, has today released its State of Credit research revealing that almost half (48%) of UK consumers are struggling to make minimum monthly payments on their credit cards as the cost-of-living crisis bites.  

The survey of over 1,000 UK consumers shows that as the UK shifts out of the pandemic into the cost-of-living crisis, consumers have simply moved from one financial worry to another. Credit is helping consumers to cope with the crisis, with 57% of those surveyed reporting using credit cards to make ends meet over the last year. Gen Z consumers are even more reliant on credit and 68% of those surveyed aged 18-25 report using credit cards to get by. The rising cost of living has also led to consumers becoming increasingly financially savvy, with 64% of respondents surveyed agreeing that they’ve become more aware of budgeting and saving over the last 12 months. 

“UK households are fighting against the rising tide of the cost-of-living crisis, but credit and smart budgeting can help them stay afloat,” commented Anna Porra, European Strategy Director at Marqeta.

“With the energy price cap set to rise again in October, consumers’ financial concerns are only set to get worse. It’s critical that banks offer flexible credit options, smart budgeting options, and better insight into spending to throw struggling households a lifeline. Developing personalised, user-friendly lending options that help consumers to navigate rising prices is crucial for banks that want to stay ‘top of wallet’.” 

The research also finds that UK consumers’ concerns around inflation and cost of living are affecting their spending decisions. Almost three-quarters (73%) of those surveyed said they plan on reducing their spending, while 54% surveyed have been forced to delay making a major purchase on credit due to their current concerns. Consumers are still reliant on credit and know what they want from their credit cards, with refund protection on purchases (42%), fraud protection (39%), and the ability to purchase without needing funds immediately (37%) being the most-cited benefits of credit cards among those surveyed. 

However, as consumers become more budgeting-aware, they’re also looking for more from their credit card provider. Many of those surveyed are seeking more personalised offerings and non-traditional credit card rewards, such as extra points or cashback for categories where they spend the most money (68%); offers from merchants they have shopped with in the past (43%); lottery rewards (36%); portion of stock (28%); or cryptocurrency (24%). Gen Z consumers surveyed were particularly interested in innovative credit options to help navigate the cost-of-living crisis, with 63% of 18-25-year-olds wanting more insight into their spending to help manage budgets more effectively. 

“As purse strings tighten, the onus should be on banks and credit card providers to ensure they’re doing everything they can to support consumers,” continued Anna Porra.

“Consumers want true control over their finances, and this means having full visibility into their spending to help count the pennies during tough times. Now is the time for banks to respond to consumer demand by offering innovative credit options – such as personalised services linked to spending habits, helping consumers to budget, or developing new ways to build credit scores. This will not only help consumers keep their heads above water during the cost-of-living crisis but emerge stronger than ever on the other side.” 

The research also finds that as consumers continue to seek more flexible options than traditional credit, many are branching out into Buy Now, Pay Later (BNPL). More than half (56%) of consumers surveyed have increased their use of BNPL solutions over the last 12 months, with this figure rising to almost two-thirds (63%) among Gen Z. Consumers are leaning on BNPL to manage rising costs, with many of those surveyed citing that it helps them to budget (42%), charges zero interest (42%), is convenient (37%), and offers more flexibility on payments (35%). Some consumers are also calling for more innovation in BNPL and would like it to extend to larger purchases such as cars (28%), home renovations (27%), dental work (26%), and travel bookings (22%).  The survey was done in July by Propeller Research, of 4,000 consumers between the ages of 18-65, 2,000 in the US, 1,000 in the UK and 1,000 in the US.

More than half (56%) of consumers surveyed have increased their use of BNPL solutions over the last 12 months, with this figure rising to almost two-thirds (63%) among Gen Z. Consumers are leaning on BNPL to manage rising costs, with many of those surveyed citing that it helps them to budget (42%), charges zero interest (42%), is convenient (37%), and offers more flexibility on payments (35%). Some consumers are also calling for more innovation in BNPL and would like it to extend to larger purchases such as cars (28%), home renovations (27%), dental work (26%), and travel bookings (22%).

The survey was done in July by Propeller Research, of 4,000 consumers between the ages of 18-65, 2,000 in the US, 1,000 in the UK and 1,000 in the US.

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