Best Startup
After a record year of rising interest rates, Brits are now being offered better rewards on their savings. Just last month, the Bank of England raised interest rates to 2.25% and as a result, mortgage prices for fixed-rate deals have also become increasingly expensive. However, as mortgage rates continue to rise – with some fixed-rates hitting close to 6.5% – so have the interest rates offered to savers. Some providers are beginning to offer a 2.75% rate on easy access accounts, while some are offering returns close to 4.5% for those willing to lock their savings for a year.
For many, this could provide a much-needed boost in capital as living costs and energy prices continue to surge across the nation. Experts are already warning of the dangers BNPL schemes pose and now, new research from the nation’s most-awarded money-saving app, HyperJar, unveils that Generation Z and Millennials are being disproportionately hit by Britain’s debt crisis. 1-in-4 Millennials, and 1-in-5 people from Gen Z, say that their biggest debt is now due to using BNPL schemes. Despite this, BNPL schemes are still being used for non-essential purchases, with Klarna now even being available to fund takeaway purchases on Deliveroo.
To combat this, and to assist the growing population who have become increasingly dependent on Buy Now, Pay Later schemes, HyperJar, is trying to promote a shift in spending mentality by offering the antithesis of these schemes. The money-saving app offers a staggering 4.8% annual growth rate (AGR) to customers when they dedicate their savings towards one of HyperJar’s partnered retailers – ranging from household names to high-street brands. For context, the UK’s average AGR is 2.5%, according to government reports. As a result, customers can save up for their purchases, and be rewarded with more spending power at a time when inflation is eating away at stagnant cash.
Despite an issue surrounding new forms of debt and Britain’s youth being evident, evidence suggests that BNPL may soon meet its demise amidst the current climate. This comes as defaults are predicted to increase in line with the slash of consumer spending power. Research from Citizen’s Advice shows that currently 42% of those using BNPL schemes are borrowing money just to be able to pay back their commitments. Not only this, but due to rising interest rates it is becoming more expensive for these firms to borrow the money needed to offer credit. In light of these hurdles, BNPL giants such as Klarna have seen their valuations slashed in recent months.
Mat Megens, CEO and founder of HyperJar comments:
“Our research clearly shows emotional, ‘quick hit’ spending is a cause of debt for millions of people – especially for younger generations. It’s the financial hangover after that instant dopamine hit from spending. That obligation to pay for things after you’ve got them has a negative emotional effect, whether we know it or not, because we now have a debt which prevents is from doing other things in life.
“Recent research from Citizen’s Advice shows that a staggering 42% of people are actually borrowing money just to be able to meet their repayments for BNPL schemes, and it won’t be long before defaults drastically increase. Rising interest rates are also putting further pressure on these firms who rely on being able to borrow money cheaply in order for the business model to work. We’re already seeing the material effects of this with the huge slashing of valuations for businesses such as Klarna. I expect we will see more of a focus on the Save Now, Buy Later ethos that we’re championing at HyperJar.”
About HyperJar
HyperJar’s innovative product has resulted in the company winning Startup of the Year 2022 and Personal Finance Tech of the Year 2022 at this year’s UK Fintech Awards. The company currently holds the Most Disruptive Payments Technology of the Year and Money Management App of the Year titles from the 2021 Payment Awards. They also took home ‘Best Personal Finance App’ and ‘Innovation of the Year’ at the 2022 British Bank Awards and the award for ‘Best Payment Industry Newcomer’ at the Card & Payments Awards 2022.
