COVID Credit Crunch: 59% of UK Consumers Have Used Credit Cards ‘To Make Ends Meet’ During Pandemic
70% of consumers prefer Buy Now Pay Later (BNPL) to credit cards due to affordability and ease of management, with 54% saying BNPL will replace their use of credit cards
Worryingly, the survey showed that while having a wider range of credit options has provided essential support during the crisis, some have found themselves falling behind with payments and building up debt:
- Of those consumers who were already using BNPL solutions before the pandemic, more than two-thirds (67%) reported that their use had increased over the last 12 months. However, more than half (53%) worry that it’s easier to fall into debt with BNPL compared with credit cards.
- While 70% of consumers are more conscious of their credit card balance post-COVID, and 60% are more aware of budgeting, almost a quarter (23%) of consumers reported having struggled to keep up with minimum monthly card payments during the pandemic.
- Despite this, 64% of consumers report using credit cards at least once per week and usage is frequent – with over two-fifths (42%) using their credit cards to make five or more purchases a week.
“Credit cards and BNPL have provided a lifeline for many during the pandemic,” says
The shift towards non-traditional payment options has shown that consumers are increasingly looking for new experiences and innovation in payments. The report found that many consumers expressed interest in different types of credit cards, such as a card that supports environmental causes (72%), or a family credit card (43%). Others were keen for more variety in rewards, with lottery rewards and stock portions being popular options. 64% of those surveyed were interested in non-traditional rewards, with 82% interested in building their own rewards programme.
It also found that nearly three quarters (71%) of consumers think that credit history should be built on more than just credit card use – with 68% stating that they would be interested in a product that builds credit history, but is paid off immediately, like a debit card.
“COVID has irreversibly changed the payments industry. Consumers want to be in control of how they pay, with greater transparency, convenience, and the ability to monitor spending driving the shift towards non-traditional payment options,” concludes Johnson. “Offering new, user-friendly payments experiences has long been a battleground for banks. But the ongoing economic fallout of the pandemic means that customers are now looking for innovative payment options that give them true control over their finances. If banks don’t respond to shifting customer demand, they risk being left behind by their more forward-thinking competitors.”
State of Credit Report
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