Those on volatile incomes , such as zero-hour contracts or in part-time work, are five times more likely to turn to high-cost credit products such as rent to own and doorstep lending, Citizens Advice has recently found.
In its latest report, Walking on Thin Ice, Citizens Advice found that 48% of adults in the UK experienced at least one monthly drop in their income, with an average largest fall of £385.
One in five (21%) people with a volatile income said they went without food or other essentials in order to pay their bills last year”. In 2017, Citizens Advice helped over 121,000 people in relation to high-cost consumer credit.
The FCA introduced a measure three years ago which applied a cap to the total interest and charges customers received on payday loans, and since this introduction, the number of people with unmanageable payday loans has more than halved. As a result of this, Citizens Advice is calling on the FCA to apply this measure across all high-cost credit products.
Citizens Advice chief executive Gillian Guy commented: “Borrowing can help people manage their budgets, but evidence shows high cost credit products can leave people trapped in unmanageable debt.
“The Financial Conduct Authority should build on the success of the cap on payday lending by introducing a similar cap on other high-cost credit products that we know are causing serious harm to consumers.”
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