15 million bill payments missed every year
Brits have missed 15 million bill payments worth a total of £882 million in the past year as the cost of running UK homes tops £405 billion, according to new research.
One in eight people will miss a bill in the next four weeks, with credit card and loan repayments, childcare costs and mortgage/rental payments topping the bills that people miss, MoneySuperMarket reveals.
Households are forking out £1,360 each month on essential bills, with a quarter of those polled paying more than £500 a month on mortgage or rent payment and 5% spending more than £1,000 on keeping a roof over their heads.
As many as 2.2 million people have missed one rent or mortgage payment in the past year.
One in five people have missed paying an essential bill in the past 12 months, averaging £175 per household. And 27% say they have been 'hounded' for payment, with 40% incurring extra interest and penalties and 8% being served with a County Court Judgement.
Waiting until the last minute to pay a bill is one strategy people use to cope with their household spending, with 16% admitting they do this. A further 12% already say they plan to pay bills late in the next four weeks, rising to 22% in the 18 to 34 age group.
People have different strategies for coping with household bills – two-fifths will cut back on basic spending, while one in five will cut back on spending on other bills and, more worrying, one in 20 simply ignore the problem. Two-fifths say they missed a bill payment because they simply couldn't afford it, while a third missed paying one bill because they had to prioritise another one.
Credit card and loan repayments are the most commonly missed bills (15%), followed by paying for childcare (12%) and rent or mortgage payments (8%).
Those aged 18 to 34 are most likely to miss a credit card or loan payment, with 23% who pay this bill missing a payment in the last 12 months. They are also more likely to miss rent and mortgage payments, with 11% admitting they've done so in the past year.
Regionally, Wales tops the list of places where people are most likely to miss a mortgage or rent payment, with 14% admitting they have done so in the past year. London follows close behind at 11%.
Clare Francis, editor in chief at MoneySuperMarket, said: "Many households are precariously juggling their bill payments, choosing which to pay and which to ignore. It's a balancing act that can't continue long-term without significant implications. "Worryingly, one in five people says outgoings would only have to go up by £50 a month (or less) for them to struggle even more. Given interest rates are likely to start rising next year, leading to increases in the cost of borrowing, it is a real concern that many people won't be able to cope.
"It's when times are tight that we need to be the most open and honest about paying bills, and absolutely not retreat into denial. Working out monthly outgoings and budgeting is crucial, as is getting the best deal on all essential household bills and not paying out more than is necessary. No one wants to be hounded for outstanding payments, or have vast penalties added to an already unaffordable situation, so always be upfront with your provider and seek help where necessary."
Top 5 missed bills
- Credit card or loan 15%
- Childcare 12%
- Mortgage or rent 8%
- Water 8%
- Council Tax 8%
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.