ONE-FIFTH OF UK CREDIT CARD USERS HAVE MISSED A PAYMENT WITHIN THE LAST SIX MONTHS DUE TO THE RISING COST-OF-LIVING
- 56% of UK credit card users rely on their card to delay payments due to the rising cost-of-living
- One in two (48%) UK credit card users worry about paying off their next credit card bill as prices rise
- More than two-thirds (69%) have an APR credit card and could save money by switching to an interest free card. Just 18% have only interest-free credit cards
30 June 2022 - Almost one-fifth of UK credit card users (19%) have missed a credit card repayment within the past six months due to the rising cost-of-living, according to new research by comparethemarket.com. The research is published as the Office for National Statistics reveal that prices across the economy are rising by 9.1% a year, squeezing household budgets.
Of those who missed a payment, one in two (52%) were charged a late payment fee, two-fifths (40%) damaged their credit score, and more than a third (36%) were charged interest on their repayments. Young people are more likely to miss a repayment due to the rising cost-of-living than older people. One quarter (25%) of those aged under 24 missed a payment in the last 6 months, compared to just 6% of those aged 55 or above.
The research also found that almost three-fifths (56%) say they rely on their credit card to spread out day-to-day spending in the face of rising prices. Almost one in two (48%) UK credit card users are worried about being able to pay off their credit card bills in upcoming months. Nearly a fifth (18%) have requested a payment holiday in the last six months due to the rising cost-of-living and 19% are considering taking a payment holiday in the next six months.
However, relying on credit cards to make ends meet can be expensive. An alternative way people who use credit cards could save money on interest, and make repayments more manageable, is by switching to an interest-free credit card. More than two-thirds (69%) of credit card users are currently on a standard annual percentage rate (APR) credit card that charges interest on money borrowed. Just 18% have only interest-free cards. People with an APR credit card could consider transferring their balance, or debt, to an interest-free card – potentially reducing the cost of their monthly repayments. It is important to research options carefully, as some interest-free cards do not allow charge free balance transfers.
Every credit application will temporarily lower your credit score, so avoid making several applications in a short period of time or if you are planning on applying for a mortgage in the next 12 months.
Alex Hasty, Director at comparethemarket.com said:
“People are increasingly reliant on their credit cards to cope with rising prices. Although credit cards can be a safe and effective tool to help you manage your finances, you may have to pay additional interest and they do come with risks if you miss repayments.
“One way you might be able to reduce repayments, or prevent having to pay more interest, is by switching from an APR credit card to an interest-free credit card, making repayments more manageable. You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card. That being said, it's a good idea to avoid making several applications in a short period of time, as this will appear on your credit score and could temporarily reduce it. It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”
For further information about credit cards, please visit:
https://www.comparethemarket.com/credit-cards/
Notes to editors
Censuswide survey on behalf of comparethemarket.com of 2,016 UK adults between 27-31 May 2022,
UK CPI data is sourced from the Office for National Statistics:
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/may2022
About comparethemarket.com
comparethemarket.com was launched in 2006 and has grown rapidly over the past sixteen years to become one of the UK’s leading price comparison websites.
comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as credit cards and loans.
comparethemarket.com actively works with its brand partners to help provide great services to customers.
comparethemarket.com is a trading name of Compare The Market Limited. Registered in England No. 10636682. Registered Office: Pegasus House, Bakewell Road, Orton Southgate, Peterborough, PE2 6YS. Compare The Market Limited is authorised and regulated by the Financial Conduct Authority for insurance distribution (Firm Reference Number: 778488). Energy and Digital products are not regulated by the FCA.