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What is the poverty premium?

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The poverty premium is the idea that the poor pay more for essential goods and services.

In the UK, the premium costs the average low income household £490 a year. However, it can be as much as £1,190 for some people.

This unfair premium is a penalty for living in poverty and only exacerbates the difficulties of managing on a low income

The poverty premium can affect people in many ways but there are eight main areas where its impact can be most felt:

  • Using more expensive pre-payment meters

  • Not paying by the cheapest billing method

  • Unable to move to the best fuel tariff

  • Paying to receive paper bills due to lack of internet access

  • Geographical premiums

  • Insurance

  • Paying to access money

  • Using higher-cost credit.

Living Without

As part of our #LivingWithout campaign, we have been investigating the poverty premium in relation to the extra costs faced by those living without basic household appliances such as a fridge, freezer, oven or washing machine.

If you live without a fridge or freezer, you have little option but to rely on expensive take-away meals or buying small amounts daily from the supermarket. Shopping every day is approximately 48% more expensive than buying in bulk.

For people living without a washing machine and relying on laundrettes, it is 2,561% more expensive than doing your washing at home.

We have also found that people with old and faulty household appliances may be spending upwards of £100 extra every year, compared to those with efficient appliances.

Additionally, if you use high-cost credit to purchase home appliances you may end up paying more than double.

Use the Turn2us Grants Search to find out if you are eligible for a grant before you take out a high-cost loan.