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Essex named UK credit card capital as consumers borrow to boost spending PDF Print E-mail
Monday, 05 February 2018
People in the South of England rely on credit cards to maintain their day-to-day spending habits while Northerners’ prefer overdrafts, according to research published today by GK Strategy and onefourzero Group. 

The findings show that reliance on credit for everyday spending is the new normal, meaning consumer finance providers will have to become increasingly aware of a customer’s overall ‘financial health’ when selling products to them.

The research ranked Google search data for consumer finance products across the UK in 2017. Essex was found to be the country’s credit card capital, hosting 4 of the top 10 urban centres searching most for credit cards and 8 of the top 10 in the South of England.

Meanwhile the majority of people looking for overdrafts were based in the North and the Midlands, with people from Newcastle searching for them the most.

The regional data indicates an increasing trend for consumers using credit to maintain their day-to-day spending patterns in the face of price increases due to economic uncertainty around Brexit, and falling real wages, which have not risen since 2015.

The increasing normalisation of debt for everyday purposes means credit providers could come under increased regulatory scrutiny, and have to prove they take a customer’s overall ‘financial health’ into account when selling them a product. In November, the Treasury select committee launched an enquiry into consumer debt and the treatment of vulnerable customers by banks.

Commenting Chris Pond, Chair Lending Standards Board; Vice Chair at the Financial Inclusion Commission, said : "A third of households have no savings whatsoever: they are one family illness, lost job or even broken washing machine away from financial disaster. As this report shows, increasing numbers are trapped in the divide between falling and uncertain real incomes and rising living costs. That divide can only be bridged by credit.

Yet access to credit, especially affordable credit, is also diminishing. This report makes a powerful case for increasing affordable credit, for lenders to treat borrowers fairly - especially the more vulnerable - and for improving people's financial health. Unless we equip people with greater financial resilience as we approach the post-Brexit world, the UK economy itself will become increasingly fragile and all of us - in debt or not - will pay a heavy price".

Commenting Robin Grainger, Co-Founder and Group CEO at GK Strategy, said: “Consumer credit is no longer the last resort for people in desperate need of financial support. Consumers across the UK increasingly see controllable debt as a way to maintain their spending power and pay for everyday items rather than just luxuries or holidays and Christmas presents.

“As consumer attitudes to debt change, credit providers will have to ready for increased regulatory scrutiny. Providers will have to show they understand when customers are likely to fall into ‘problem debt’ which could have a highly damaging impact on their wellbeing.”

Commenting Fleur Hicks, Chief Executive at ounefourzero, said: “It’s surprising how preferences in consumer credit change depending on geographic region. Our findings reflect local environments, with unemployment hotspots such as Newcastle seeing the largest demand for overdrafts, while the more affluent commuter belt around London preferring credit cards.

“Credit use is rising, with demand for overdrafts rising by 46% in November 2017 compared to the same time the year before. Credit providers will no doubt been keen to cater to this need for further products, but should be aware that financial regulators are also focusing in on the sector.”

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