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August 2022 - Financial Services

Half UK adults with high-cost loans make minimum payment each month: A survey looking at the financial situation of people in the UK has revealed that almost half of those who have high-cost loans make only the minimum payment each month, with one in 10 saying that they are unable to afford even the minimum payment.

The survey findings were published in a Financial Inclusion report from ethical lender Plend, produced in collaboration with Nationwide Building Society; Responsible Finance, and debt charity StepChange.

Polling 4,500 UK adults, the survey found that 62% of respondents had some form of credit, ranging from overdrafts and credit cards, with an average value of £8,200.

Amongst those who had been refused credit, 28% turned to family and friends to help them out, while 23% turned to products with a higher interest rate/APR.

The survey also looked to gauge how knowledgeable people are about credit scores and their financial health in general, finding that just two-fifths of adults (41%) are aware of their credit score. It also found that six in 10 respondents do not understand how credit scores are calculated.

The survey also found that 20% of people feel 'locked out' of the financial system, unable to obtain credit from a bank or other lender, which according to the findings, equates to around 11 million people.

Rob Pasco, chief executive and co-founder of Plend, said: “Having a thin or invisible credit file is just one of the reasons many people are financially excluded from accessing affordable credit products and basic financial services - the lending industry has failed to address this problem at time when the need has never been greater due to the cost of living crisis.”

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