Introduction
A new study from responsible lender Creditspring reveals that millions of people in the UK turned to credit cards this January to cover basic living expenses like food and bills. With the rising cost of living and post-holiday financial strain, many households struggled to make ends meet.
Younger people are especially affected, with a quarter of those aged 18-34 relying on credit cards or borrowing money to get through the month. As financial pressures continue to mount, the need for responsible and affordable credit options has never been greater. Creditspring aims to provide a safer alternative, helping individuals access funds without falling into long-term debt.
Read: Cross-Border Payments: Improving Access to Financial Services in Emerging Economies
Growing Dependence On Credit Cards
Many people are using credit cards not for luxuries, but for everyday necessities. Research shows that 12% of UK adults needed a credit card this January to pay for essentials like heating, food, and rent.
This highlights the growing financial strain on households as costs continue to rise. Young adults, in particular, are struggling—25% of those aged 18-34 needed a credit card to manage expenses. While credit cards provide temporary relief, high interest rates can lead to long-term debt if balances are not repaid in full.
Financial Struggles Among Young People
The financial situation for younger adults is worsening, with many reporting that they have never been in a worse financial position. Nearly 28% of 18-34-year-olds say they are struggling more than ever. A longer-than-usual gap between paydays after Christmas, combined with rising living costs, is leaving many with no choice but to borrow money.
While borrowing can be necessary, high-cost credit options can lead to financial difficulties, making it harder to escape debt in the long run.
The Need For Affordable Credit Solutions
As millions start the year under financial pressure, responsible lending solutions are crucial. Many people lack access to affordable borrowing options, forcing them to turn to high-interest credit cards or payday loans.
Creditspring offers a transparent and responsible credit subscription service, helping people avoid debt spirals. Their Benefits Finder tool also helps individuals discover unclaimed financial support, with an average of £963 in potential benefits per month. Accessible, fair credit options can prevent long-term financial harm and offer struggling households a safer path forward.
Why This Matters For The Fintech Industry?
This issue is highly relevant to the fintech sector as it highlights the growing demand for responsible financial solutions. Traditional lending models often trap borrowers in cycles of debt due to high interest rates and hidden fees. Fintech companies, like Creditspring, are innovating to provide transparent, affordable, and regulated credit services. By leveraging technology, fintech firms can create smarter lending solutions that prioritize financial well-being. As more people seek alternatives to traditional credit, fintech has an opportunity to drive meaningful change in how financial support is accessed and managed.
Read latest fintech articles: The Rise of Neo-Banks: Transforming Financial Access in Emerging Markets
Industry Comments
Neil Kadagathur, CEO and Co-Founder of Creditspring, said: “The cost of Christmas and the long gap between paydays have left millions relying on credit cards for essentials. The risk of falling into a debt spiral is high, especially for those unable to clear their balance each month. We need to provide people with safe and responsible borrowing options to avoid long-term financial difficulties.”
Conclusion
With the rising cost of living, many UK households are starting the year in financial distress. The overreliance on credit cards for basic needs is concerning, particularly for younger people, who are facing unprecedented financial strain. While borrowing may be necessary, high-interest credit products can quickly lead to overwhelming debt. Fintech companies like Creditspring are stepping in to offer a safer and more responsible approach to credit. By providing affordable lending options and tools like the Benefits Finder, fintech firms can help people manage their finances more effectively. As financial pressures continue, innovative and fair financial solutions will be essential in ensuring people can borrow safely without risking long-term hardship.
Read latest fintech articles:Fintech for Women’s Financial Empowerment
Read latest fintech articles:The Future of Digital Wallets and Payment Systems for the Unbanked
Read: Fintech in Hospitality: Top 10 Fintech Solutions for Hotels
To participate in our interviews, please write to us at news@intentamplify.com