Britain’s worker debt crisis is a time bomb
New figures identify that 78 per cent of workers use various types of credit cards, such as payday loans, credit cards, and unplanned overdrafts, to source money quickly between paydays.
James Herbert, CEO of fintech app Hastee Pay, suggests that this indicates that peoples’ monthly ingoings are not aligned with their monthly salaries.
The Financial Conduct Authority voiced its concerns about these findings in relation to Britain’s debt time bomb.
71 per cent of workers aged 25 to 44 are reliant on credit cards, suggesting that young workers are risking long-term financial stability by accumulating debt with no other means of accumulating funds to help them until payday.
A significant proportion of workers also use overdrafts, doorstep loans and payday loans to bridge the gap.
However, almost half (47 per cent) of respondents had difficulty relying on payday loans. An additional 45 per cent have experienced difficulty depending on doorstep loans and 40 per cent have encountered complications with bank overdrafts.
These findings aren’t inclusive to workers on a low income, as the survey found that 75 per cent of higher paid earners across the UK rely credit on cards.
“There is a clear disconnection between spending habits and the frequency of pay,” says James Herbert, CEO of Hastee Pay.
“The fact that those in steady employment are struggling to balance their incomings and outgoings paints a worrying picture. We’re not just seeing those on lower pay struggling to put food on the table but also middle-income families unable to cope with an unexpected £500 bill.”
“The reliance on high-cost credit options for even those in senior positions tells us that pay cycles are too rigid for today’s workforce to effectively manage their finances and provide for their families.”