Don’t rely on credit for household bills, says expert

People should refrain from using credit, loans and overdrafts to pay their household bills, the money education charity Credit Action has said.

Although people have been increasingly using these facilities in the past year, the organisation says that it is not a long-term solution.

Capital Economics recently reported that the share of household income spent on food, bills and other unavoidable costs has risen to 31 per cent from 25 per cent over the past six years.

“It could well be that people who need to find that little bit of extra money to get them to the end of the month or pay the gas bill may revert to credit to do that,” commented Chris Tapp, director of Credit Action.

However, he said that people should be careful of becoming overly reliant on credit since resorting to these measures for long time periods could result them having in serious financial difficulties.

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Britons lack financial education

We are not receiving enough education about our finances and this is leading to problems in later life.

That is according to the ifs School of Finance which is highlighting the problem as part of Credit Awareness Week (CAW).

The financial education charity is keen to promote the importance of learning about money so that we all perform better when it comes to banking.

New figures, released by Credit Expert, have shown that 80 per cent of us regularly overspend and many of us have already considered declaring ourselves bankrupt.

The research found that nine per cent of us have taken out a credit card to pay off the debt on another card, while ten per cent have missed payments on loans, mortgages and cards.

It is statistics such as these that experts say show just how financially unaware many Britons are.

“What this research seems to expose is a serious lack of understanding of the long-term consequences of these actions and how it can affect your credit rating – ultimately impacting your financial future,” said Credit Expert’s managing director Jim Hodgkins.

“We feel it’s imperative that people fully realise the implications of not managing their finances properly.”

The ifs School of Finance is pushing the government to include a GCSE in the national curriculum that focuses on money and how to handle it properly.

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