As UK consumers struggle with cost-of-living and inflation they’re looking for more from their banks and credit card providers, new research from global modern card issuing platform Marqeta has revealed.
The UK economy has stagnated as the cost of living crisis hits household budgets and business activity. The cost of living is increasing at nearly its fastest rate in 40 years, driven largely by the rising cost of food and fossil fuels. Prices in August were also 9.9 per cent higher than they were 12 months ago.
Marqeta’s State of Credit survey of more than 1,000 UK consumers shows that 57 per cent are relying on credit to make ends meet, while almost half (48 per cent) are struggling to make minimum monthly payments.
The Marqeta research shows that concerns around inflation and cost-of-living are affecting spending decisions. Almost three-quarters (73 per cent) of those surveyed said they plan on reducing their spending, while 54 per cent surveyed have been forced to delay making a major purchase on credit due to their current concerns.
Consumers are also becoming increasingly financially-savvy, with 64 per cent of respondents becoming more aware of budgeting and saving over the last 12 months.
Staying afloat
According to Anna Porra, European strategy director at Marqeta while UK households are fighting against the rising tide of the cost-of-living crisis, credit and smart budgeting can help them stay afloat.
“With the energy price cap set to rise again in October, consumers’ financial concerns are only set to get worse,” she says. “It’s critical that banks offer flexible credit options, smart budgeting options, and better insight into spending to throw struggling households a lifeline. Developing personalised, user-friendly lending options that help consumers to navigate rising prices is crucial for banks that want to stay ‘top of wallet’.”
More innovation
Many of those surveyed are seeking more personalised offerings and innovative credit card rewards, such as: extra points or cashback for categories where they spend the most money (68 per cent); offers from merchants they have shopped with in the past (43 per cent); lottery rewards (36 per cent); portion of stock (28 per cent); or cryptocurrency (24 per cent). Sixty-three per cent of18-25-year-olds want more insight into their spending to help manage budgets more effectively.
Consumers are also seeking more flexible options to traditional credit. Fifty-six per cent have increased their use of buy now, pay later (BNPL) solutions over the last 12 months, with this figure rising to almost two-thirds (63 per cent) among Gen Z. Some consumers want more innovation in BNPL and would like it to extend to larger purchases such as cars (28 per cent), home renovations (27 per cent), dental work (26 per cent), and travel bookings (22 per cent).
“As purse strings tighten, the onus should be on banks and credit card providers to ensure they’re doing everything they can to support consumers,” continued Porra. “Consumers want true control over their finances, and this means having full visibility into their spending to help count the pennies during tough times.
“Now is the time for banks to respond to consumer demand by offering innovative credit options – such as personalised services linked to spending habits, helping consumers to budget, or developing new ways to build credit scores. This will not only help consumers keep their heads above water during the cost-of-living crisis, but to emerge stronger than ever on the other side.”
Image and article originally from thefintechtimes.com. Read the original article here.