Nearly 14 million people in the UK – more than a quarter of the population – are borrowing money to cover the cost of household bills in a typical month, according to new research.
Instead of using money from their current account, Brits are borrowing £3.6 billion each month to meet the cost of gas, electricity, council tax, water and other household bills, which is equivalent to around £259 for each person borrowing money.
While millions are turning to lower cost borrowing such as an arranged overdraft, the research raises concerns as more than a million people collectively borrow £2 billion every year, or £153 each per month, from payday lenders to cover these basic monthly bills.
The most popular source for finding additional money is an overdraft, with around 17 per cent of UK adults using this service each month to pay their bills, borrowing an average of £264 each, more than any other source.
The Santander’s research reveals that despite 28 per cent of all Britons looking to these alternative payment sources to help cover the cost of bills, only 32 per cent regularly check for cheaper deals on services like utilities or TV subscriptions meaning that millions may well be paying over the odds.
The findings also show that only a quarter (26 per cent) of bill-payers actually ensure they have sufficient funds in their account by making sure they pay bills or schedule direct debits for just after payday.
Reza Attar-Zadeh, banking director at Santander, said: “In an ideal world, household bills should be one of the first costs to be covered when payday arrives, but as the research highlights, this isn’t always possible. The cost of living is going up, driven in part by the rising cost of household bills, and as a result, millions of people are regularly borrowing money to make ends meet which cannot be sustained in the long-run.
“The fact that only a third of people are regularly looking for ways to reduce their monthly bills is worrying, as there are a number of opportunities to bring these costs down that require very little effort or change.”
Men are more likely to use alternative payment sources to cover bills than women, with 30 per cent of males doing so each month compared to 26 per cent of females. Younger bill payers are also more likely to borrow money to cover bills, with 38 per cent of people aged 18-34 doing so, compared to just 30 per cent of those aged 35 – 54 and 17 per cent of over 55s.