Money Matters: The impact of the Cost of Living Crisis

How have people in the local area’s finances fared over the last year and do they expect their financial circumstances to change over the coming 12 months? Greg Potter, Head of Member Experience at Leeds Credit Union (LCU), takes a look.

As the cost of living crisis continues to increase the financial pressure on many households in our region, we recently got in touch with our members to encourage them to take part in a survey about their current financial situation and their expectations for the coming months.

This is something we do regularly to allow us to better understand local residents’ economic situations. Here are the most recent results.

LCU member survey results October 2023

Out of 765 replies, 67% said the rising cost of living had affected their household ‘greatly’ or ‘extremely’. Just 1% reported the crisis as having had no effect at all.

50% of respondents said their finances were in worse shape than at this time last year. Fewer than 10% said their finances were in better shape compared to 2022.

Nearly two thirds of respondents (63%) had turned to Leeds Credit Union for a loan to help them navigate the cost of living crisis, with 17% using the money to pay for day-to-day expenses like food and 10% needing it to pay their rent/mortgage.

Suffice to say that when such a significant number of people in the region are having to rely on loans to make ends meet or to afford necessities like food, this paints an overwhelmingly negative image.

What would our members have done without LCU?

Even more alarming were respondents’ replies to the question: what would you have done if you hadn’t borrowed from a credit union?

  • 29% reported that they would have had to cut back on essentials like food or heating.
  • 22% said they would have had to go into arrears on bills or rent.
  • 16% said they would have turned to a payday lender.

Of all the results, the final one is perhaps the most upsetting, with the high interest rates typically charged by payday lenders likely to result in more financial problems for the person taking out the loan, making the situation worse than it already was.

Furthermore, predatory loan sharks have been known to masquerade as payday lenders to offer short-term loans for small sums of money before charging exorbitant interest rates that can make it extremely difficult to repay the debt.

How credit unions can help

While there is no quick fix for the financial problems many households currently face, people should take solace in the fact that many reputable financial organisations exist and are available to help them when they need them most.

Under no circumstances should anyone suffering financial difficulties be tempted to turn to loan sharks or high-interest lenders to help them through the cost of living crisis. Instead, anyone in need of help should contact their local credit union as soon as possible.

Leeds Credit Union provides straightforward and affordable financial services to people in Leeds.

Photo: Shutterstock


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