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Usage and experiences of high cost credit: consumer research report

Evidence type: Insight i


The Financial Conduct Authority (FCA) took over the responsibility for consumer credit in 2014, and it has since focused on the products that pose the greatest risks to its consumer protection objectives. In 2017, following a Call for Input in 2016 on areas of concern for the high cost short-term credit sector, the FCA published a statement that detailed its priority areas for review. As part of this, the FCA identified a need to gain a deeper understanding of consumer use and experience of high cost credit products.

The study:

The FCA commissioned PricewaterhouseCoopers (PwC) to conduct consumer research to explore consumers’ use and experience of high cost credit products. The methodology included nine discussion groups and 60 in-home depth interviews in eleven locations across England, Wales and Scotland. All participants involved in the research had to be current users of at least one of the following credit products: Home Collected Credit, Rent to Own, or Catalogue Credit/Store cards. PwC selected research participants based on their use of these products, the length of time they used them, the ways in which they managed their credit, and how well or not they felt that they were coping with their borrowing. There was also a mixture of people from different socio-economic backgrounds, although implicitly the sample was weighted towards people with low incomes.

Key findings:

Demographic overlap among customers of different product

The research found that the demographic profile, attitudes and behaviours of customers using Home Collected Credit and Rent to Own were similar. Often, people had been customers of both products, and typically were from low-income households where there were high levels of financial pressure on the household.

Catalogue credit and store card customers had differing perceptions of products

Customers who had store cards were more likely to see Home Collected Credit and Rent-to-Own products as an expensive source of credit, comparable to ‘loan sharks’. In contrast, catalogue credit customers tended to be more open to these two products.

Key factors that contribute to more habitual use of high-cost credit

The research identified three key factors that could contribute to consumers becoming habitual users of high-cost credit:

  • The need to manage finances on a weekly basis – this led to customers considering the short-term, affordable cost of borrowing over the implications of it in the long-term.
  • Lack of perceived options against an immediate need for a solution – consumers’ decisions tended to be steered by what they knew or believed to be the lending options available to them. The speed of access to products, or a quick application process, often influenced decision-making.
  • Impulsive attitude to spending – some consumers struggled to avoid the temptation to ‘buy now, pay later’.

Convenience and ease-of-use motivated people to use high-cost credit products

For both short-term and long-term users of high-cost credit, the familiarity, convenience and ease of borrowing made products feel ‘approachable’, ‘safe’ and ‘friendlier’ compared to alternative credit sources.

Convenience, ease of use and high interest rates are the biggest drawbacks

Aside from the high interest rates and high costs associated with the credit products, the main drawbacks to the products were the ease at which consumers could access the products, and the perceived ‘norm’ or social acceptability of catalogue credit/store cards.

Overconfidence can lead to difficulties

Many consumers underestimated their ability to keep up their repayments. In particular, some consumers failed to anticipate the possibility of any negative changes in their future financial situation, including a reduction in benefits, job loss, or a domestic ‘emergency’ (such as an appliance breaking down).

Making more informed decisions

The research identified several ways in which customers might make more informed decisions about their choice of a product or a lender. In particular, customers wanted more transparency about how organisations charge for and manage ongoing credit, as well as more clarity on when providers would increase credit limits.

Points to consider:


  • The findings are relevant to a range of stakeholders, from government and regulatory bodies to providers of high-cost credit and the consumers of these products.

Generalisability/ transferability:

  • As a qualitative research study the findings are not necessarily generalisable to the wider public, though do provide a snapshot of the experiences of high cost credit users.

Key info

Client group
Year of publication
England, Scotland and Wales
Contact information