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Do ‘Just About Managing’ families really need to pay a premium for credit? PDF Print E-mail
Friday, 30 June 2017
An industry-first credit line product is proving that many of the UK’s hard-working families (some known as ‘JAMs’) do not need to pay an expensive premium for access to credit, proving that it is possible for financial services providers to price for risk whilst still offering fair products for consumers.  

Research by Which?[1] has found that consumers needing as little as £100 over a 30-day period are being charged up to 180% of the amount borrowed on unarranged overdrafts offered by banks if the borrowing is across two billing periods. But a credit line product is proving that many of the UK’s hard-working families (some known as ‘JAMs’) do not need to pay an expensive premium for access to credit.

The phrase ‘just about managing’ or ‘JAMs’ has been used to describe the six million working households who are just getting by to pay their bills but are left with less disposable income. A report by the University of Bristol[2] recently calculated the ‘premium’ that many of these households are paying – which can be as high as £750 a year in higher rates of charge for essential services, including credit. [3]

After extensive research into the market and its consumers, one of the UK’s leading on-line short-term credit providers, Lending Stream LLC, has launched a fee-free, credit line that enables households to meet occasional unexpected expenses at a low cost. In a recent survey of their customers, Lending Stream found that almost 2/3 of their customers described themselves as ‘just about managing’. [4]

Mark Fiander, Vice President of Marketing at Lending Stream says: “For far too long, people in the ‘financial middle’ have paid unnecessary premiums to access the credit that they need to smooth out the peaks and troughs of everyday living. This is why we have introduced Drafty for people who were being squeezed by the limited choices currently in the market. Many of Drafty’s customers would have previously needed to use unarranged bank overdrafts to meet their occasional credit needs. Yet the charges are sky high. Some people are paying up to £180 in fees for the short-term use of £100. The equivalent costs for borrowing with Drafty is only £5.40.” [5]

At 5.4%, Drafty is over 33 times cheaper than the most expensive unarranged overdrafts. Which? has also found that unarranged overdraft charges at some high-street banks are as much as 7.5 times higher than the maximum charge of £24 on a payday loan allowed by the Financial Conduct Authority (FCA). [6]

Lending Stream has an industry-leading 5* rating on Trust Pilot [7] and 95% of its customers say they would recommend it to others. [8]

Mark continues: “The demand we have seen so far for Drafty reflects the very real need for convenient and flexible credit. It is important to note that our customers are not using credit frivolously or to pay for their essential services – but they simply need to manage unforeseen costs and gaps in their monthly income. The use of technology and powerful data analytics has been crucial to enabling this choice, while ensuring lending decisions are made responsibly.

“Our customers are not low-income people on the breadline, but are hard-working employed people who are in the ‘financial middle’ – often owning their own homes, with dependent children earning a good salary, but are still facing situations of financial insecurity due to the effects of the modern economy and labour market.”

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