Young adults across the UK are coming into contact with credit earlier in life, but many still do not understand the basics that could protect them from financial harm. That’s according to new research from Creditspring, the subscription-based credit provider on a mission to improve financial stability across the UK. A survey of 2,000 UK consumers found a clear generational divide in financial literacy, with 18-24-year-olds consistently less confident and less informed than older age groups on how credit works in practice.Knowledge gaps lead to financial riskJust 45% of young adults said they understand what “APR” means, compared with 67% of over-55s. Fewer than half (46%) said they understand the term “minimum repayment”, compared to 83% of those aged 55 and over.More concerningly, only 52% of 18-24s correctly identified that missing a loan repayment damages their credit score, compared with 83% of over-55s. Meanwhile, only 55% knew that paying bills late can also have a negative impact, well below the national average of 70%.The research also points to widespread confusion about what does and does not affect a credit score. Only 41% of 18-24s knew that having out-of-date address information across things like bank accounts and bills could have a material impact, compared with 67% of over-55s.At the same time, many young adults wrongly believe that factors such as income level (43%), having a student loan (34%), or renting rather than owning a home (45%) directly affect their credit score.Misunderstanding also extends to credit products themselves. More than a third of 18-24s (35%) believe that a product advertised as “0% interest” would definitely carry no extra costs which is nearly double the proportion of over-55s (16%). Only 39% of young adults correctly identified that they could still be charged late fees on credit products, including Buy Now Pay Later (BNPL).Taking the right action when struggling with repaymentsThe gap becomes even more serious when people face repayment pressure. When asked what they would do if they were struggling to make a repayment, only one in five 18-24s (20%) said they would contact their lender - widely seen as the most important first step. Among over-55s, almost half (49%) said they would do so.Neil Kadagathur, Co-founder and CEO of Creditspring, said: “This research shows that many young adults are using credit before they fully understand the basics that keep them safe.“That matters, because missing repayments, paying late, or misunderstanding the terms of a product can have lasting consequences. If people are engaging with credit earlier through products like Buy Now Pay Later, the information around it needs to be clearer, simpler and easier to act on.“Credit can be a useful tool, but only if people understand the risks as well as the benefits. That is why lenders, regulators and policymakers all have a role to play in making sure young people get the right information at the right time.”Creditspring was founded in 2016 to drive a movement towards making credit fair and transparent. By charging a fixed monthly fee for access to pre-agreed credit, the model removes the risk of escalating interest and hidden charges, giving members a clear picture of exactly what borrowing will cost them from the moment they apply.NoYesPersonal Finance28 Apr, 2026