THE VAST majority of workers are using credit to tide them over between pay days, according to new research from payment app maker Hastee Pay.
It found that 78 per cent of workers are relying on payday loans, credit cards and unplanned overdrafts to source cash quickly before their next pay day, suggesting monthly outgoings are higher than people’s wages. These findings echo concerns already voiced by the Financial Conduct Authority on Britain’s debt time bomb.
The research also found that 71 per cent of younger workers aged 25 to 44 rely on credit cards in particular, putting them at risk of getting caught in a debt cycle.
A significant proportion of the workers surveyed who are experiencing financial difficulties use overdrafts, doorstep loans and payday loans to bridge the gap. Almost half said they had experienced difficulties relying on payday loans, while 45 per cent had struggled with doorstep loans and 40 per cent with bank overdrafts.
In London, dependence on high cost credit is even more severe. Hastee Pay’s research reveals that 91 per cent of Londoners rely on credit cards to help budgeting and personal finance due to the high cost of living in the capital.
These findings are not exclusive to workers on low incomes. Three quarters of higher paid earners and those in senior positions also find themselves financially vulnerable, the research found.
“The purchasing demands of modern society, with technology having created an ‘on-demand’ culture, no longer fit the traditional monthly pay cycle,” said James Herbert, chief executive of Hastee Pay.
“The reliance on high cost credit options for even those in senior positions tells us that pay cycles are too rigid for today’s workforce to effectively manage their finances and provide for their families.
“The financial stress this creates is impacting workplace productivity. Employers should consider offering workers immediate access to earned pay, smoothing workers’ incomes to match their spending needs.”
Hastee Pay’s ‘Workplace Wellbeing Study’ was conducted by independent research consultancy, Vitreous World, and polled over 1,000 UK residents to uncover their working habits, credit arrangements and payment methods.
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