8.7%
UK inflation rate for May 2023.
The fact of the matter is that all credit is bad.
We’ve compiled some basic facts about debt and credit, not necessarily to dissuade you from signing up for Fairlo, but mostly because we believe in full transparency, that fair lending starts with well-informed customers.
All credit have an innate dysfunction.
Changing and improving starts with acknowledging one’s shortcomings so we have to be honest about the toxic aspects of our, and every other credit’s, nature.
The simple truth is that most credit have a variable relation between the quality of the terms they offer and the assessed risk the customer constitutes. The short version is that terms such as interest rate, fees, limit and time decrease in quality the higher the risk is assessed to be. Hence, the people that need good terms the most get the worst terms. And if you find yourself unable to pay they trade with your debt, selling it in bundle to debt recovery firms. To most credit’s defense, many would go bankrupt if they didn’t adhere to these basic principles of lending. But change needs to start somewhere and we’ve started with offering everyone the same interest rates, delivering full transparency through the Fairness Receipt and by equipping our customer service team with tools to help out customers that find themselves struggling to pay their monthly repayments. It’s a good start but rest assured we’re working on more ways of addressing our industry’s shittiness every day.
Key facts and truths you should know.
External link (source)
£3.965
total unsecured debt per UK adult in February 2023.
£2.277
average credit card debt per UK household in February 2023.
£62.4 billion
is what Brits owed in credit card debt as of September 2022.
£2.2 trillion
total UK household debt, nearly the size of the entire UK economy.
73%
UK consumer pessimism
Almost three-quarters are “very pessimistic” about the rising cost of living. That’s 26% higher than for consumers rest of the world.
External link (source)74%
Experience increased burden
Almost three-quarters of UK adults feel that the burden of keeping up with domestic bills and credit commitments had increased.
External link (source)50%
Anxious and stressed
1 in 2 of UK adults were more anxious or stressed due to the rising cost of living.
External link (source)24%
Affecting mental health
Almost a quarter of UK adults suffered with mental health due to rising cost of living.
External link (source)£59,042 million
The UK’s total interest payments on personal debt over a 12-month period if based on February 2023 numbers
5.6 million
The amount of UK adults missed payments on domestic bills or meeting any of their credit commitments in 3 or more of the previous 6 months.
£162 million
The estimated interest payments on personal debt in the UK. Per day. Based on February 2023 numbers.
310 months
it would take to pay off a credit card debt on the average interest making only the legal minimum repayments each month.
79%
Don’t trust rates to be fair
Percentage of credit-holding UK adults that don’t believe that loan and credit companies charge fair rates.
External link (source)48%
Don’t trust banks for support
Percentage of people in the UK that don’t trust their bank to help them manage their finances during a recession.
External link (source)3.3 million
The estimated amount of yearly hours UK banks’ customer services leave customers waiting on the line.
A brief history of lending.
Once upon a time, in the not-so-distant past, lending and borrowing were straightforward affairs. People needed money, and lenders were there to help, offering a helping hand in times of need. But somewhere along the way, the story took a twisted turn.
In the ancient world, lending existed even in civilizations such as Mesopotamia around 2000 BCE. Loans were accompanied by interest rates, and failure to repay had dire consequences. The concept of lending continued to evolve through ancient Greece, where "beneficial interest" replaced interest rates, allowing lenders to share in the profits generated by the borrowed capital.
During the Middle Ages, the Catholic Church played a significant role in regulating loans. Usury, or charging excessive interest, was strictly forbidden. However, creative circumventions emerged, such as "compensatory payments," to justify interest earned.
The rise of industrialization in the 19th century brought about the establishment of banks and the birth of modern consumer credit. This newfound accessibility allowed individuals to pursue dreams, start businesses, and buy homes. But as time went on, the landscape changed.
In recent times, the lending industry has faced criticism for predatory practices. With a focus on profit, lenders have lost touch with consumers. High interest rates, hidden fees, and complex terms have trapped borrowers in cycles of debt, preying on the vulnerable and desperate.
Yet, amidst the darkness, a glimmer of hope emerges. People are demanding change, seeking fair and transparent lending practices.
As the tale continues, let us remember the origins of lending—a practice rooted in empathy and support. Let us strive to bring back those values, reshaping the narrative for a lending landscape that nurtures and empowers. Together, we can create a future where fairness, equality, and genuine assistance prevail.