One third of UK credit customers don’t understand credit agreements

Bristol, UK: 2 July 2025: A new report by the UK’s leading credit-building business, Loqbox, has uncovered a startling gap in financial literacy with one-third of UK consumers saying that they don’t fully understand the terms of their credit agreements and that younger generations, especially people aged 18-24 are experiencing the most financial stress in managing credit.

In the dynamic and fast-moving UK consumer finance landscape, people now have more options to borrow on credit than ever before. For most people in the UK, using credit is a fact of life. Through credit cards, personal loans, mortgages, car finance, Buy Now Pay Later (BNPL) and other forms, most people in the UK will use at least one or several of these borrowing options. Loqbox’s report, “How to Borrow Money” illustrates the scale to which credit is used as a tool that makes life’s purchases more manageable:

• 31% of all respondents had borrowed money in the last year, with almost half (49%) using credit cards, 35% using personal loans, and 18% using BNPL
• BNPL is most popular with people aged between 45-54, followed by those aged 18-24
• Women were more likely to borrow on credit cards, however, men were more likely to borrow on BNPL, and more likely to borrow larger amounts of £6,000 and over

Loqbox’s report includes the findings of a survey conducted in conjunction with polling firm Censuswide, which gathered 1,000 responses from all corners of the UK, including Scotland, Wales and Northern Ireland, from young adults aged 18 to those 55 and over and across all income brackets. Drilling deep into age, gender, demographic and regional differences in the usage of credit makes the report the most in-depth examination of people’s appetite for borrowing on credit, how they use it, their attitudes towards managing personal finances, and their level of financial education and awareness. 

The findings reveal a concerning trend: A significant number of credit users are at risk of falling into financial difficulty due to a lack of understanding. Specifically:

• 33% of respondents don’t understand the terms of credit agreements they’re agreeing to, including key terms like ‘annual percentage rate (APR)’, ‘variable rate’ and ‘default’
• Only 14% of survey respondents always read the small print when they borrow money
• A staggering 69% don’t understand what ‘annual percentage rate’ means
• Only 25% of all respondents always think about whether they can afford repayments in the long term, and women are more likely than men to factor affordability into their long-term plans

Tom Eyre, co-founder and CEO of Loqbox, comments: “The reality is that credit is used responsibly by millions of people across the UK. It’s often provided by reputable lenders and serves as a flexible means of managing finances for people at all income levels. The ongoing popularity of credit is down to one simple truth — people just want more choice and flexibility in how they pay for things. But with this demand comes the responsibility to ensure that people fully understand what they’re signing up for. Financial education is key to responsible borrowing.

It’s crucial that people take the time to fully understand the terms of their credit agreements and ensure that it is affordable for them. That’s why financial education is critical and why at Loqbox we’re passionate about empowering people with the tools and knowledge to navigate the complexities of today’s financial world with confidence.” 

You can read the How to Borrow Money Report here.