More than 60% of cash-strapped Irish households cannot cover the cost of essential household bills and are having to dip into credit cards, overdrafts, and loans just to make ends meet.
That is according to new research published today by consumer switching site Switcher.ie, which has urged families to take control of their household budgets in a bid to reduce the reliance on debt.
The study found that, in the last year, 62% of consumers were forced to resort to using credit or to dip into savings just to pay the basic household bills. Just under 40% said they were able to cover the cost of bills like rent or mortgage, insurance, energy and broadband through their current earnings.
The survey also showed that, in the last 12 months, one in four people used a credit card to make ends meet, while 16% used an overdraft, 12% borrowed money from family and friends, and 8% used a bank loan. Other options included pawning or selling belongings (4%) and using doorstep lenders or payday loans (2%).
One-fifth of those surveyed said they are worried about the debt they have found themselves in as a result of paying day-to-day living costs and household bills. Over one-third said they have resorted to dipping into their savings to cover the cost of essentials such as their rent/mortgage, insurance costs, energy, and broadband bills.
Although recent data from the Central Statistics Office showed that motor insurance premiums are falling, it is still listed as the biggest cause of worry among consumers, with almost 50% saying this bill alone puts them under enormous pressure.
A total of 43% said their rent or mortgage payments cause them financial stress, closely followed by motor tax (40%) and health insurance (36%).
The energy price hikes over the past few months are also having an impact, with one-third of people (34%) saying the payment of their electricity bills puts them under pressure.
Other essentials such as broadband/internet (32%), property tax (32%) and paid TV services (31%) are also putting a strain on household finances.
Eoin Clarke, managing director of Switcher.ie, said that relying on borrowing or savings to see each month through might seem like an easy or quick fix, but should always be a last resort.
“It’s true that we may not be able to control our income level or the cost of living, but we can all take steps to control our spending, firstly by creating a weekly or monthly budget and sticking to it where possible and secondly by taking control of our essential household bills,” he said.
“The fact is that many of us stick with the same providers for years and years, automatically renewing our policies and contracts. As a result, we often end up paying far more than we need to for these essentials.”
Mr Clarke said that, with the latest Consumer Price Index showing a year-on-year increase, consumers are unlikely to see any respite in their wallets or bank statements any time soon.
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