BANKS should watch customer’s spending habits to spot those at risk of financial difficulty and debt problems, a new report suggests.
According to the research, half of UK adults think their bank or building society should use their personal data to identify money problems.
The report by the Money and Mental Health Policy Institute (MMHPI), which is chaired by MoneySavingExpert’s Martin Lewis, spoke to over 2,000 people about their views on the idea.
The data suggests that half of UK adults think their bank or building society should track their data to identify problems, with just one in ten disagreeing.
People suffering from mental illness were particularly keen on the idea, with one anonymous respondent saying tracking their finances could “prevent things escalating”.
But, half of people were also concerned about their privacy, with some worried their data may be given to third parties or used by their bank to make decisions about their finances.
One in three people said that their bank or building society telling them about a financial problem would make them feel worse about it.
But, other were happy with the idea of being able to choose the kind of access and interventions their bank would use.
Suggested ideas to help those with debt problems include sending texts when bad patterns are spotted, sending support information, or even blocking transactions.
How to get out of debt
RECORD numbers of Brits are seeking help to manage their debt.
While getting back on track can seem like a daunting task, we've taken a look at what you can do to help you on the way.
Get help for free: There are lots of groups who can help you with your debts.
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
Don't ignore bills: Ignoring your bills won't make them go away, as tempting as it may be, and the problem will likely escalate. It's best to tackle debt head on by working out exactly what you owe and when you need to pay it back.
Make a budget: Once you know what you need to pay back, it'll become easier to prioritise your finances. The next step is to create a detailed budget so you can see how much you have going in and going out. Use an online tool like one from Citizens Advice to help you do this.
Switch and save: Households can save hundreds of pounds by checking if they can get a cheaper deal elsewhere. In fact, MoneySavingExpert says families can save £330 on average by switching from Standard Variable Tariffs (SVTs) to a better rate. Use a comparison site like MoneySuperMarket or Energyhelpline to see what deals are available.
Get a balance transfer card: If you're paying interest on your credit card balance, this can ultimately add to your debt pile. A better option could be getting a 0 per cent balance transfer card. These types of card will let you transfer an existing balance to a new card and gives you the chance to clear it fully without incurring interest. MoneySavingExpert's eligibility calculator will let you know what deals you will likely qualify for. You'll need to have a good credit rating to qualify for one.
See if you're entitled to benefits: It's important to check if you're entitled to any extra benefits or tax credits if you're struggling financially. Citizens Advice can help you see what help is available and there's a benefits calculator on the Gov.uk website. Help ranges from tax credits, job seeker's allowance and universal credit.
Also consider: You can find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the Money Advice Service website and on the Government's Gov.uk site. But make sure you know exactly what you're signing up to as these plans aren't suitable for everyone. Many firms charge a fee for the service, either upfront or one that's incorporated into your monthly payments.
The report, which was funded by Barclays, has called on the government and Financial Conduct Authority to publish guidance on how banks could implement such schemes.
Commenting on the findings of the report, Helen Undy, chief executive of the Money and Mental Health Policy Institute, said:
“Barely a week goes by without a news story about how companies are using our personal data, and the impact that’s having on our privacy and safety.
“While these concerns are legitimate, focusing solely on the dangers risks overlooking the enormous opportunity data can present – with the potential to even save lives.”
“Around 100,000 people in problem debt attempt suicide each year in England, with many suffering in silence and struggling to ask for help.
“Something as simple as a bank checking in with a text message if someone’s data shows a sudden drop in income, or signposting them to extra support, could make all the difference.”
If you are worried about mental health or debt, the MMHPI has a list of resources that can help you.
The debt advice charity StepChange said it received over 300,000 calls for help in the first half of 2019.
Here's some advice from The Sun on how you could get out of debt in eight steps.
One mum paid off £200,000 worth of debt in just 33 months and managed to buy her dream house, she's shared how she did it.
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