Low base rate has helped credit card borrowers

According to industry officials the low base interest rate may have helped many homeowners in the UK to address their credit card debts, as many may have used their surplus funds to make repayments on their credit card debts. Over the past few years many have struggled to keep on top of repayments, but having spare money left over on mortgage repayments due to the lower base rate may have come as a real blessing to many homeowners.

For many people the past couple of years have meant having to rely increasingly on credit cards, and this has resulted in many people accruing significant debts on their credit cards. The base rate falling to its lowest level in the history of the Bank of England, which spans over three centuries, and the subsequent drop in mortgage repayments will have therefore come as a blessing to the many homeowners that have been struggling with their credit card debts, giving them some extra financial breathing space.

Officials believe that many of the more prudent homeowners in the UK will have used the savings that they made on their mortgage repayments to try and clear high interest debts such as credit cards, which will have relieved them of an extra financial burden and may have saved them a fortune in terms of the interest that they may otherwise have paid.

Whilst some may have been tempted to put the extra money that they saved on their mortgage repayments into savings many have realised that the returns on savings are so low at present they are better off using the money to clear high interest debts such as credit cards.

One financial expert said: “Those prudent borrowers who have made savings on their mortgages I think generally have either paid off their expensive debts, [this often] being their credit card or personal loan.”