Skip to navigation Skip to content Skip to footer

People with unstable finances five times more likely to turn to high-cost credit, Citizens Advice reveals

22 February 2018

UK households struggling on volatile incomes - for example those on zero-hour contracts or in part-time work - are five times more likely to turn to high-cost credit products such as rent to own and doorstep lending, new research from Citizens Advice shows.

In its latest report, ‘Walking on Thin Ice’, the national charity says household budgets are increasingly vulnerable to changes in income or life events because of lower levels of savings and falling real earnings. People in insecure work are particularly at risk.

It also reveals that last year, almost half of UK adults (48%) experienced at least one monthly drop in their income, with an average largest fall of £385. One in five (21%) people with a volatile income said they went without food or other essentials in order to pay their bills last year.

The new research also found households that experience unexpected changes in income are more likely to resort to expensive credit products to manage their expenses.

It says people with volatile incomes are not just more likely to need to borrow to pay for essentials, they are also more likely to fall into a spiral of debt.

Last year Citizens Advice helped more than 121,000 people with problems relating to high-cost consumer credit, including one woman who approached her local office for help as she struggled to pay her outstanding doorstep loan debt.

Despite monthly repayments, 18 months later, the outstanding balance is triple the initial £300 she were lent - due to further borrowing to cover her repayments and interest.  

Figures in the report show the unsecured debt held by people with highly insecure incomes is, on average, 57% higher than that for people with stable incomes.

Citizens Advice is calling on the Financial Conduct Authority (FCA) to cap the total interest and charges customers have to pay back when they take out high-cost credit products like rent to own and doorstep credit - a measure that has seen the number of people with unmanageable payday loans more than halve since it was introduced three years ago.

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.

“Longer term, we also need better solutions in order to help people save, as well as alternative borrowing options for those who don’t have the option to borrow affordably from commercial providers.”  

The report also found:

  • 35% of UK households are susceptible to a 25% change in their income from year to year.

  • One in 10 households spends 80% of their income on essential items like food, transport and bills.

  • One in four (25%) people with a volatile income used their overdraft or credit card to pay for essentials.

  • More than one in 10 (13%) UK adults said their income varied significantly from month to month - rising to almost half (49%) for people who are self-employed or in insecure work.

Notes to editors

  1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To get advice online or find your local Citizens Advice in England and Wales, visit
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.