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Talk Money Week Raises Awareness of Responsible Finance in Young People

Research published by the Money and Pensions Service as part of Talk Money Week, shows that 25–34-year-olds are twice as likely to use a payday lender or use other short term high-cost credit than not-for-profit community lenders.

 

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Friday 26 January 2024

Research published by the Money and Pensions Service as part of Talk Money Week, shows that 25–34-year-olds are twice as likely to use a payday lender or use other short term high-cost credit than not-for-profit community lenders.

The survey asked 503 people across the UK aged 25-34 about the options they’d be most likely to consider if they needed credit. Payday lenders (10%), other short-term high-cost credit (9%) and unauthorised overdrafts (6%) were all more common responses than credit unions (5%).

This age group are also the most likely to ask friends or family for a loan (26%) – a dwindling source of support as everyone feels the cost-of-living increase.

According to Fair4All Finance’s own research, there are 7.7 million people aged 18 to 34 in financially vulnerable circumstances, almost half of all 17.6 million adults in such circumstances. As a result, it’s urging younger people to be aware of all their options so they can make informed choices whenever they take out credit.

Credit unions plan to grow their membership of 1.4 million by 5 to 10% per year over the coming years and ABCUL CEO, Robert Kelly is encouraging people to find their local credit union and seek support with their finances and adds the sector is focussed on helping more young people to join their member-owned, not for profit finance movement.

“Credit unions are changing fast. Many are embracing digital transformation and on-demand customer service which is attracting younger members,” says Robert. “Credit unions offer members the safety net of access to fair affordable credit from local organisations that have their interests at heart whilst helping them build financial resilience through savings, however small.”

“Our ethics appeal to younger customers. But whilst our strength is in our not for profit, member-owned set up, we can’t compete with the marketing budgets of companies looking to profit from people struggling in the cost of living crisis – this explains why awareness is so low.”

Lauren Peel from Fair4All Finance said: “Millions of younger adults are excluded from the best deals available from mainstream providers – many are gig economy or self-employed workers with irregular incomes, and they are also likely to be private renters facing increasing rents. This age group also face many one-off expenses such as moving home or putting down a rental deposit, or even smaller amounts like repairing or replacing essential appliances. Whilst lots of people know about payday lenders, we recommend that they check if they are eligible for an affordable loan from a credit union or community lender first. A short term, high cost lender can cost over £350 more in repayments on a typical £400 loan paid over 6 months than a credit union.”

Barbara Limon, Policy Manager at the Money and Pensions Service, said:  “It’s concerning to see that young people might not be aware of every option open to them. Credit can be very useful when it’s used well, but it can also be a significant commitment. That’s why it’s important to have all the information available to choose the product that best fits your needs.

“This Talk Money Week, we’re asking young people to be open and honest about money by starting the conversation with family and friends. By sharing discussing their finances openly, seeking out guidance and sharing their money worries, they can all make the right decisions for the future.”

 

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