A quarter of families need to borrow to survive this winter as inflation pushes parents into debt

UK families face being pushed into debt over the next few months with over a quarter (27%) of people with dependents saying they’ll need to borrow to survive the winter, according to research from subscription loan provider, Creditspring.

Families’ finances are set to suffer much worse than those with grown-up children – of whom just 5% will need to borrow to survive.

The research also reveals that almost half of families with children under 18 are almost three times more likely to say they’re unable to financially survive another lockdown this winter (44% vs 16%) than those without children. The financial strain on households is set to worsen as inflation and living costs continue to soar.

Recent figures from the Centre for Economics and Business Research indicates that the average family could be £1,700 worse off next year whilst the UK inflation has now hit 5.1% – the highest rate in a decade – and forecasts suggest it could rise to 5.5% in early 2022.

Neil Kadagathur, Co-Founder and CEO of Creditspring, comments: “Families are feeling the brunt of rising costs during the most expensive time of the year and are becoming increasingly worried how they’re going to survive what is shaping up to be the toughest period since the financial crisis.

“Families are facing a perfect storm which is going to pile more pressure on budgets. Inflation and living costs are soaring at the exact moment when the nation needs to tighten the purse-strings. The approaching Christmas period is only going to exacerbate the situation and could be the tipping point that pushes households into debt.”

Creditspring’s research also shows almost a quarter (22%) of families with children under 18 have been forced to turn to high-cost loans after being rejected by mainstream lenders, and 20% of these borrowers have struggled with the expensive repayments.

As a result of increasingly stretched household finances, 40% of families with children under 18 want more support from banks when making financial decisions and managing money – more than twice as many as adults without children (19%).

Neil Kadagathur says: “Banks and financial providers need to step in to ease the pressure on families before it’s too late. The impact of the pandemic is still raw and with yet more uncertainty and restrictions, families need support to help get through the coming months.

“Affordable credit has provided an invaluable lifeline for people across the UK however, access to these options remains limited. There are still too many families forced to turn to high-cost lenders who take advantage of their perilous financial position and offer credit with extortionate repayment terms. With a lack of support, the fear is that the situation could become significantly worse before it gets better.”

This month, Creditspring announced that the number of customers looking to access affordable loans doubled from 50,000 in July to over 100,000 in December – as household finances increasingly struggle.

Creditspring’s fixed cost and low-risk credit solution offers customers access to two advances per year, with clear repayments, capped costs, and no hidden charges or confusing APRs.

Creditspring’s 100,000 members benefit from the platform’s affordable, easy-to-use loans and education tools, including its Stability Hub service which offers members a financial health audit and personalised tips to improve their financial situation, as well as its ‘Step’ credit builder product that helps members gradually improve their credit score without running the risk of incurring further debt.