More than a third of workers say they have used ‘buy now, pay later’ services during the cost of living crisis
- Some 38% of workers said they used buy now, pay later to boost their finances
- Nearly a third (30%) struggle to talk about money with loved ones
More than a third of workers have used buy now pay later loans to give up their finances to deal with the cost of living crisis, a survey of more than 3,000 employees found.
Credit cards, bank loans, and payday loans are also used to combat rising expenses — and all of these products can have high interest charges if repayments are late, missed, or mismanaged.
In a survey by professional services firm Barnett Waddingham, 38% of employees said they had used BNPL and a further 15% planned to use it in the future.
More consumers are using credit to top up their finances as costs remain high
Just under a third (30%) said they had increased their use of credit cards, while 17% had taken out a bank loan. Meanwhile, 12% had used payday loans.
This surge in cheap credit could weigh on the UK’s economic recovery in the long term, delaying the return to confidence as increasingly vulnerable consumers grapple with mounting debt at a time of weak wage growth. , warns professional services firm Barnett Waddingham.
Others said they planned to use their essential savings to meet additional costs, while 16% planned to cash out their investments and a similar number said they would withdraw their pension to make ends meet. .
One in ten (12%) said they have already started using the food bank.
If nothing changes soon, our data shows that a growing number of employees will go into debt – if they haven’t already
Julia Turney, Barnett Waddingham
Julia Turney, partner at Barnett Waddingham, said: ‘With wage growth having seen minimal increases in recent months, we are now witnessing worryingly a rise in a ‘financially vulnerable’ workforce, as people’s salaries do not meet their monthly expenses.
“It’s clear that people are watching their budgets closely, but if nothing changes soon, our data shows that an increasing number of employees will go into debt – if they haven’t already.”
“While credit has a role to play as part of a sound financial plan, it is never the answer to a personal debt crisis. Not only could this jeopardize an employee’s future financial resilience, but it could also fuel a nationwide “cost of living decline”, shaking consumer confidence and stalling economic recovery.
The charity Citizens Advice said more than half of people who come to the charity for help already have a ‘negative budget’ meaning there is nothing to to balance their income and expenses.
The cost of living crisis has put pressure on household finances, with inflation remaining high
In the survey, just 13% of workers said they had sought help from a mental health charity, while less than one in ten had turned to a monetary charity (9%).
The finding echoes Monzo research which found that more than half of Britons (53%) say not being honest about their finances affects their mental health.
Additionally, more than a third (38%) said they had become even less open about money during the cost of living crisis.
Almost a third (30%) say they find it difficult to talk about money, while 29% are too shy to bring up the subject.
One in four respondents (40%) to Monzo said they found an excuse not to do something, when the real reason was financial difficulties – leading to feelings of anxiety (28%) and even shame (24% ) .
Sujata Bhatia, Chief Operating Officer of Monzo, said: “Our findings show that money is truly the last taboo in everyday social interactions – with people hesitant to even talk to loved ones about the subject.”
How can you save money?
The cost of living crisis has put our finances in the spotlight. If you’re looking for inspiration to save money or check your finances, the following checklist can help:
Check your savings rate: Many big banks continue to pay a pittance while the challengers raise their rates. Here are the best savings offers from our independent tables.
Negotiate a better broadband, TV or phone deal: Many of us are guilty of overpaying once a contract expires with telecom giants. Compare broadband, phone and TV plans to see if you can save money.
Compare insurance: When it comes to auto, home and travel insurance, it’s important to shop around, make sure you have the right level of coverage and use a well-rated company. See if you can find a cheaper deal with our comparison service provided by Compare the Market.
Mortgage rate: Whether you’re buying a new home, paying off a new mortgage, or buying an investment property, our L&C partner can help you find the best rates – and you won’t pay any fees for their advice.
Energy tips: Energy prices are soaring. Here’s what you need to know, if you can still fix it, and energy-saving tips that work.