Families with children at home twice as likely to have taken payment holidays
According to comparethemarket.com’s Household Financial Confidence Tracker, fewer than one in ten (9%) families without children at home have taken payment holidays, but more than a fifth (21%) of those with children have done so.
Among families that had taken payment holidays, 11% had to ask for a freeze on credit card bills or personal loans. Other common debt freezes include household bills (11%), such as energy, water, motor or home insurance, along with mortgages (6%), council tax (4%) and rent payment deferrals (4%).
More than a quarter (26%) of families with children struggled to pay their bills over the past seven days, up from 23% last week. This compares to 15% of households without children at home.
Three in 10 (30%) families with children think the economic hit from COVID-19 will force them to cut back or make sacrifices for six to 12 months after the lockdown ends, compared to 19% of households without children.
When asked why they were not confident that they would be able to pay or manage household bills, 41% said that it was because their employment status had changed for the worse. This is a rise from 37% last week.
The figure is more pronounced amongst young people, with 59% of those aged 18 to 24 reporting a negative change to their employment status.
Nearly half (48%) of this age group said that their income was not enough to cover their outgoings, and a quarter (25%) have had to dip into savings.
Anna McEntee, product director at comparethemarket.com, said: “These figures will spark concern that families with children are at a higher risk of taking on unsustainable amounts of debt as the economic impact of the pandemic hits their finances, especially as many payment freeze periods are now coming to an end.
“The government – and indeed many financial services companies – [has] done a huge amount to help households financially during this difficult time.
“However, the combination of deferred payments and additional borrowing which will need to be paid back could cause problems for many families over the coming months.
“If interest accrues on these debts, households may be faced with hefty bills they were not expecting.
“It is important to only make use of payment holidays on mortgages and other household bills if you absolutely have to.”
McEntee added: “Household financial confidence is still low and many families appear more concerned about paying the bills rather than returning to pre-lockdown life.
“This hesitancy to get out and spend could have a significant impact on getting the economy back on its feet.”