Poll: Families frequently borrowing money to pay bills
Published by Max Salsbury for 24dash.com in Housing and also in Communities, Finance
UK inflation soars to 4.4% in July
Hard-up families are regularly borrowing money to pay their bills, a survey has revealed.
The poll found that most are taking out loans with friends and family.
The anonymous survey, carried out by Gloucestershire Affordable Housing Landlords’ Association, aimed to discover how tenants are coping in the current financial squeeze and to see what sort of help might be arranged to help them budget better.
A total of 903 people completed the questionnaire, half of whom were housing association tenants. Nearly 150 of them rent homes from Two Rivers Housing in Gloucestershire and Herefordshire.
Most of the Two Rivers tenants who took part are in part-time work and almost half (47%) said they never borrow money.
However, of the 76 people who do, 15 take a loan at least once a month, 33 say they ask for help several times a year and 28 people do so annually.
Almost two-thirds (63%) of those borrowing said they needed the money to pay bills, whilst a third said it covers one-off expenses, such as a car or replacing household items.
Three-quarters borrow from friends and family, but, worryingly, 17 of Two Rivers' tenants (23%) said they had used a doorstep lender or an online payday loan company. One person admitted to using a loan shark.
Interest rates vary considerably with the majority paying between 0% and 30%. However, nine people (12%) paid anything between 31% and 200%, and three people said they were charged interest up to 3,000%.
Nearly half (47%) of people who took part in the survey said they ‘always’ or ‘regularly’ have enough money left over after paying their essential bills, but 38 people (27%) said they ‘rarely’ or ‘never’ had enough.
Garry King, Two Rivers’ chief executive, said: “Our research shows the majority of people taking out loans are borrowing the money to pay their bills, and many of them are doing so every month. This is a real concern as it shows that they are not coping with the demands on their income and they regularly reach a pressure point where they need to find extra cash, just to get by.
“Fortunately, many of them can call on family and friends to help out, but this isn’t the same for everyone and there are a few horror stories of people borrowing from money-lenders who charge astronomical interest rates.”
The research also attempted to discover what type of financial assistance would be most helpful for those struggling to manage their money.
Low-cost loans were the most popular choice (49%); 32% said they would appreciate advice; while 31% (27) said they would welcome savings accounts - ‘jam-jar’ - that would help them to budget.
“We have two advisors dedicated to helping tenants to budget carefully, manage their income and claim the benefits they are entitled to,” added Mr King. "We will now compare the information from this survey with our housing association partners to see what more we can do to help.”