One in five families is now living in persistent debt just to cover essential bills. The worst of the recession may be over, but two-thirds of households are still forced to borrow for their utilities. One in five of these families is unable to break the cycle and has fallen into a debt trap.
Essentials such as mortgage, electricity and fuel are causes for concern, but the rising cost of motor insurance is the biggest worry. The research carried out by Switcher.ie also found that a third use credit cards for bills, while 20% have borrowed from family and friends. Those more fortunate (13%) have been gifted money to pay for troubling bills.
The findings spell potentially bad news for longer-term savings, with 40% of people forced to dip into their nest eggs last year to pay for bills.
These trends are “unsurprising” according to the independent price comparison and switching service that commissioned the survey.
It claims that electricity costs in Ireland are now the sixth highest in the EU and the energy bill for an average household now comes in at over 2,000e per year.
Meanwhile, broadband costs in Ireland consistently rank amongst the highest in the continent.
But while gas and electricity bills have historically been the biggest worry, the findings show that motor insurance is now an even bigger concern for cash-strapped households.
With CSO figures showing that premiums have risen by 57% in the last three years, four-in-ten consumers say that their motor insurance bill puts them under financial pressure.
Managing Director of Switcher.ie Eoin Clark says: “Many of us are facing into the new year with debt – be it from credit cards, overdrafts, or even loans from family and friends.”
“And for lots of consumers, this debt is stacking up because the cost of running a home – and paying for essentials like gas, electricity, broadband and phone – is simply too high.”
“The energy market is also really competitive at the moment and consumers who shop around for a better deal and take advantage of the offers out there could save up to €402 a year off their bill. This is a significant saving for minimal effort and could go some way towards clearing existing debt and will hopefully help householders avoid going into debt to pay basic bills like this in the future.”