How did you spend the lockdown period? For a lot of people, it has a lot to do with the TV.
Market research firm Kantar estimated in May that a fifth of all households in the UK had subscribed to a streaming TV service such as Amazon Prime, Netflix or newly launched Disney+ since lockdown began.
Parents juggling working from home with child care and schooling at home may beg to differ that lockdown has provided more free time to settle in and relax, but for others it involves binge-watching like Tiger King, The Last Dance or Little Fires. Everywhere.
A Kantar survey of 15,000 people found that the average British household now has a 2.3 TV subscription service, and Netflix figures revealed at the end of March that one in five people in the UK are subscribed to it – likely to have risen while Britain has stayed home since That moment.
Millions of people have subscribed to streaming TV services like Netflix, Amazon Prime and Disney + during the coronavirus lockdown
But if this is a trend, it is an existing trend that has been accelerated by closure rather than anything new.
The director of business subscription service Zuora suggested that in 2018 the average Briton spent £44.50 a month on subscriptions, a staggering rise from just over £18 the year before.
No wonder the UK’s payment authorities said in a presentation last year that purchases “go from ownership to leasing everything”.
It’s not just TV, of course. If you’ve been bothering trying to write down all your subscriptions, the amount of them might surprise you, with £7.50 here and £5 there quickly adding up.
Based on money management advice I spotted on Twitter, a boring weekend before lockdown meant all weekends got boring, I made a list of all the payments and subscription services outgoing from my bank account each month and put the dates on my phone calendar.
Spotify, Netflix, charitable donations, the New York Times, there were quite a few, and then of course there was my credit card bill.
But while American Express and Spotify both take a certain amount of money out of my bank account every month as regularly as clockwork, one shows up on my credit file as proof of my ability to make regular payments and the other doesn’t.
Right now my credit card bill pales in comparison to how much I spend on monthly subscriptions, after crashing into how much I spend on trains, petrol and down the pub.
But it’s the credit card that doesn’t count all those subscriptions.
The central paradox of credit scores and reports has always been that you need to have credit to prove you can handle credit.
This is why you see so many stories about so-called “invisible mortgagers” who were denied mortgages because they didn’t have a credit card.
The better your credit score, the greater your chance of being accepted for a mortgage or getting a better rate on a loan or credit card.
The contrasting treatment of these two monthly expenses isn’t something I would give much thought to, until the end of May we did a report on an app called Bits.
The central premise is that you pay a monthly subscription fee for this “digital credit card,” in exchange for it boosting your credit score with Experian.
It’s an interesting idea, though the problem is that it doesn’t do anything else, you’re only paying money to improve your creditworthiness in the eyes of lenders.
But if the service you were paying for did the same thing anyway? this is different.
Experian, one of the Big Three reference agencies, whose scores can help determine the cost of your credit card or loan or whether to get a mortgage, has you in mind just that.
Credit reference agency Experian is studying whether subscription service payments to individuals can help improve their credit score
It’s purely theoretical for now, but it’s looking into whether subscription service data can give insight into whether someone is able to make “regular, accountable payments for a product or service.”
They say it is an acknowledgment of people’s changing financial habits.
There are, of course, two important reasons why the two are different. Credit is subject to formal agreements and regulated direct debit, for example, while subscription services are usually just debit card payments.
I can tell Netflix I want to cancel my subscription on a whim, I can’t just tell American Express I don’t want to pay my credit card bill this month.
An app called Bits will improve your Experian credit score for a monthly fee
As Dave Weber, of TransUnion, another credit agency, said: “When investigating new data sources, there are various considerations we take into account, such as whether a payment is a discretionary spending that can be canceled at short notice.”
But rating agencies are aware of people’s changing habits and the way new data sources may help to “volume” people’s credit profiles and provide more comprehensive information that helps determine how likely they are to afford a loan.
You can already see this with services that target renters, as your monthly payments appear on file and improve your credit score.
Information about how much people pay per month on subscription services could go hand in hand with open banking, whereby people’s financial statements are opened with their consent for lenders and rating agencies to look at.
“It provides financing providers with unparalleled insight into consumer affordability,” Weber added. “Open banking allows consumers to share their checking account data explicitly, giving lenders a really detailed picture of their financial obligations.”
It’s probably a while away, but the Disney+ subscription you removed because you wanted to watch Hamilton could one day be a reason to get a cheaper credit card or qualify for a mortgage.
And if that’s not reason enough to convince you to cancel it, you might even save yourself the few minutes of effort it takes to do so if we all have to stay home again for months on end.
Some of the links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to influence our editorial independence.