Young pay price of borrowing
One in ten (nine per cent) young people in the South West say they have borrowed money from companies, according to a shocking new report released today by Action for Children.
The charity’s report, Paying the Price, has uncovered a worrying level of borrowing amongst young people.
Out of the 1,052 12 to 18-year-olds surveyed, in the South West a third (38 per cent) of those that said they have borrowed have done so with pay day loan providers. High street lenders including store cards are also becoming a port of call, with 13 per cent of young people) saying they use them as an easy and quick way to access money.
Action for Children’s frontline services see young people resorting to borrowing money to replace household goods, set up their first home or keep up with their friends. And in the run up to Christmas the charity is worried as it sees the festive season as one of the biggest reasons young people resort to borrowing money.
The charity believes the crisis will be made worse by a lack of financial knowledge amongst young people in the South West. It has discovered that 43 per cent of children have not received any financial education or do not know if they have done so. Of the young people who had received financial education, 90 per cent learnt from parents or carers and only 17 per cent learnt about money at school.
Brigitte Gater, director of children’s services at Action for Children, says: “High interest products and companies are now far too easy for young people to access.
“Some young people are less likely to have the financial skills they need, they may have to live on a low income or are not in education. They are also not able to learn about money at home or at school where other young people do. Add in baffling financial jargon and a lack of knowledge will dramatically create a vicious circle of debt, increasing the risk of mental health problems and unemployment.
“We cannot afford to let children pay this price because of a simple lack of financial education. They must be equipped with the necessary skills to make informed money decisions to give them a chance of a happy future.”
Action for Children is calling for targeted support to young people who are less likely to be financially capable and who at greater risk of falling into debt , by going beyond home and school and creating opportunities to learn about money in other services like youth services and children’s centres and with adults who young people can depend on.
The report also highlights that:
• 42 per cent of Action for Children’s frontline staff know young people aged 16 – 25 years-old who are accessing high interest credit, cash or goods such as pay day loans – that’s around 3,500 vulnerable young people.
• 27 per cent of Action for Children’s managers feel that their young service users are accessing high interest products because they’re simply unaware of the hidden costs and risks.
