Consumer finances continue to worsen

Mon, Jul 9, 2012, 01:00

IRISH PEOPLE’S finances are continuing to deteriorate with the number who say they have less than €25 to spend each week once all essential bills have been paid increasing sharply over the last three months, according to research published by the Irish League of Credit Unions (ILCU).

Its second What’s Left tracker survey of the year found that 1.82 million adults say they have less than €100 a month to spend after bills are paid. This compares with a figure of 1.64 million it recorded in April.

Among the most bleak findings in the report are those that suggest 17 per cent of adults – which equates to 602,000 people – say they have absolutely nothing left for discretionary spending once all bills are paid.

The survey, which was carried out last month, found that disposable income has dropped, with 69 per cent of those polled saying they have less money now than they did this time last year.

It also reported that Irish consumers owe an average €1,100 on their credit card, with a quarter using the facility to make ends meet each month.

Half of those polled said paying all bills on time was a struggle, while 40 per cent said they had borrowed to pay household bills over the course of the last 12 months.

Of those who had borrowed money, 10 per cent said they had been compelled to go to a moneylender to access funds.

“The issue of personal debt is something we are hearing more and more about and the issue is a growing concern, particularly for those who are relying on their credit card to make ends meet every month,” said ILCU chief executive Kieron Brennan.

“Even more concerning is that of those who are borrowing each month to meet payments on their household bills, 10 per cent are turning to moneylenders,” he continued.

Mr Brennan repeated the ILCU’s call on the Government to put a legal cap on the interest rates charged by moneylenders in Ireland.

“With the level of personal indebtedness and financial exclusion in Ireland, there is a real danger of compounding the problem by allowing legal moneylenders to charge excessive rates,” he said.

The survey found that mortgages and rent continue to be the most expensive bills for the majority of Irish adults, with 72 per cent saying they were the items on which most was spent. The next most costly bill was groceries, followed by utility bills and transport and car-related costs.

The tracker reveals considerable confusion in the area of bank charges. Half of bank account holders are unaware of what their bank charges are to operate their current account, while 54 per cent of current account holders said they had no idea what they pay, or would pay, in charges if their account was overdrawn.

Just 54 per cent of consumers said they knew what interest rate was charged on their credit cards.

“We would urge people to take some time to understand their bank charges and credit card interest rates and certainly look at their personal and household budgets to ensure that these costs are covered,” said Mr Brennan.

The tracker suggests that 47 per cent of consumers struggle to pay all of their bills on time. This figure has remained the same since the April 2012 tracker was recorded.

It shows that 44 per cent of those who cannot pay their bills on time are very stressed and worried about making ends meet.

Television licences, telecoms, bin charges and electricity are the bills most likely to be put off by people.

The survey was conducted by market research company iReach during June and responses were collected from 1,000 adults from across Ireland.

According to the ILCU, its research has a confidence level of 95 per cent.