More than a third of workers say they have used buy now, pay later during the cost-of-living crisis
- About 38% of employees said they had used buy now, pay later to boost finances
- Nearly a third (30%) find it difficult to talk about money with loved ones
More than a third of workers have used a buy-now-pay-later loan to give their finances a head start on the cost-of-living crisis, a survey of more than 3,000 workers found.
Credit cards, bank loans, and payday loans are also used to counter rising spending – and all of these products can incur high interest costs if repayments are late, missed, or not managed correctly.
In a survey by professional services firm Barnett Waddingham, 38 percent of employees said they had used BNPL and another 15 percent planned to use it in the future.
More consumers are using credit to supplement their finances as costs remain high
Just under a third (30 percent) said they had used credit cards more, while 17 percent had taken out a bank loan. Meanwhile, 12 percent had resorted to payday loans.
This cheap credit increase could take a long-term toll on the UK’s economic recovery and slow the recovery of confidence as increasingly vulnerable consumers grapple with mounting debt at a time of low wage growth, professional services firm Barnett Waddingham warns.
Others said they were considering using their essential savings to cover extra costs, while 16 percent were thinking of cashing in on their investments and a similar number said they would be taking their retirement to make ends meet.
One in ten (12 percent) says they have already used the food bank.
If something doesn’t change soon, our data shows that a growing number of workers will go into debt – if they haven’t already
Julia Turney, Barnett Waddingham
Julia Turney, partner at Barnett Waddingham, said: ‘With wage growth showing minimal growth in recent months, we are now worryingly seeing the rise of a “financially vulnerable” workforce as people’s salaries fail to cover their monthly expenses.
“Clearly people are watching their budgets closely, but if nothing changes soon, our data shows that a growing number of workers will go into debt — if they haven’t already.
While there is a role for credit as part of a sound financial plan, it is never the answer to a personal debt crisis. Not only can this jeopardize a worker’s future financial resilience, but it can also lead to a national drop in the cost of living, hampering consumer confidence and slowing economic recovery.”
The charity Citizens Advice has said that more than half of people who come to the charity for help already have a ‘negative budget’, meaning nothing can be done to balance their income and expenditure.
The cost-of-living crisis has put pressure on household finances as inflation remains high
In the survey, only 13 percent of employees said they had asked a mental health charity for help, while less than one in 10 went to a charity for money (9 percent).
The finding echoes research from Monzo showing that more than half of Britons (53 per cent) say being dishonest about their finances affects their mental health.
In addition, more than a third (38 percent) said they had become even less open about money during the cost-of-living crisis.
Nearly a third (30 percent) say they find it difficult to talk about money, while 29 percent are too embarrassed to broach the subject.
One in four (40 percent) of Monzo respondents said they made an excuse not to do something when the real reason was financial hardship – leading to feelings of fear (28 percent) and even shame (24 percent). ). .
Sujata Bhatia, Monzo’s chief operating officer, said: ‘Our findings show that money really is the last taboo in everyday social interactions – people even shy away from discussing the subject with those closest to them.