Zero-hours workers are 5 times more likely to turn to dangerous loans

Created February 22nd, 2018 by Alex Watts

People on zero-hour contracts or working part-time are five times more likely to take out dangerous, high credit loans just to cover food and bills.

As reported by The Mirror, Citizens Advice found that one in 20 (5%) people with volatile incomes said they or an adult in their household had taken out a doorstep loan, a payday loan or used a rent-to-own scheme at some point to pay for essentials.

The survey of more than 2,100 people found that, in comparison, just 1% of adults generally would turn to these types of products.

Trapped in unmanageable debt

Gillian Guy, chief executive of Citizens Advice, said: “Borrowing can help people manage their budgets, but evidence shows high-cost credit products can leave people trapped in unmanageable debt.

“Our research shows that people are turning to these products when their finances are already in a precarious position. Consumers should be protected to ensure they do not end up in a spiral of debt that has damaging knock-on effects.

“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.”

A monthly drop in income

In its report, Walking on Thin Ice, the charity added that last year nearly half (48%) of UK adults experienced at least one monthly drop in their income, as households with squeezed budgets have become increasingly vulnerable to income shocks.

Yesterday, a Post Office investigation found that a typical family on an average monthly income of £3,156 with access to £10,741 in cashable savings, would struggle to cope after just 46 days if faced with continued outgoings, such as bills and mortgage payments.

And that scenario is even worse for those with a volatile income, as 21% said they went without food or other essentials to pay their bills last year.

On top of that, 13% of British adults said their income varied significantly from month to month – rising to 49% for people who are self-employed or in insecure work.

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