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Parents rely on credit to meet childcare costs

Childcare

Published at 9:44am 7th March 2019.

Parents turn to credit to meet childcare costs

  • More than a quarter of parents are said to be relying on credit to meet rising childcare costs.
  • A study by Noddle also suggests the average monthly bill for nurseries and child minders is now more than £1,000.
  • Mum-of-two Jane Blackwood from York was at one point spending more on childcare than the mortgage.

The average monthly cost of childcare is said to be more than £1,000 per child.

A study's also found 1 in 4 families has to rely on credit to pay nursery or childminding bills.

Noddle.co.uk commissioned the research which found:

  • The majority (70%) of parents say their childcare provider has increased rates in the last year.
  • Average monthly costs for childcare services passes £1,000, with more than half (55%) of families saying these years are the most financially challenging of their lives.
  • Over a quarter (28%) of parents rely on credit to meet steep costs while children are in childcare – even those with higher income.

The study found families tapping into credit whilst their children are in nursery accrue on average £9,220 of debt before their children reach primary school age.

And once these costs have subsided, it takes these families an average of 16 months to recover from the debt they’ve built up.

These higher costs are coming as a surprise to many parents.

More than half of parents (52%) say they were underprepared for the financial cost of childcare and a similar number (55%) say that the years they relied on childcare have been or are currently the most financially challenging time of their lives.

Mum-of-two Jane Blackwood from York was at one point spending more on childcare than the mortgage.

She said:

"When we had children, we said we'd be sensible from the start - and put money aside for university. But we've basically had a complete cut on saving anything for the years while the children are pre-school age. Rising childcare costs have had a huge impact on us as family."

Parents report that the cost increases are being justified by providers as a response to inflation (29%), wage growth (23%) or Brexit uncertainty (21%).

Jane added:

"One thing we have done and been forced to do is get a credit card. For Christmas last year, for example, we used all savings we had which were put aside in anticipation to supplement the childcare costs. That has gone - we had to get the credit card to pay for every day, 'normal' stuff."

In some cases, it even meant that going out to work didn’t make financial sense, with half of families (52%) saying they or their partner had to reduce their working hours to provide childcare.

Jacqueline Dewey, Managing Director at Noddle.co.uk said:

“Parents might not be putting childcare bills on credit directly, but a significant number rely on credit during these years as childcare costs put strain on their disposable income.

“Any financial planning before having a child should take in to account your credit score. Parents with a good credit score should be able to secure better rates and therefore pay less to use credit over the long-term. So visiting a site like Noddle.co.uk will allow parents to check their score for free, and also learn how to improve it.”

For more information and advice from Noddle, visit its website.

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