The Latest On Credit Card Debt

November 8, 2006

The Latest On Credit Card DebtIf you’re carrying a huge credit card debt, then you’re not alone. The latest figures from debt education charity Credit Action shows that UK consumers are carrying an average of £4,508 of debt on credit cards, car loans, overdrafts, retail finance and unsecured personal loans. And this debt is costing an average of £3,204 a year in interest payments.

But that’s not all. The same figures show an average UK debt of £26,747, which rises to £50,918 when you take mortgages into account. The Citizens Advice Bureau puts the average debt of its clients at 17.5 times the average monthly salary. That’s a lot of debt.

The situation is not helped by the junk mail offering new credit from credit card providers. It was recently estimated that people were getting more than 13 offers of new credit a year, whether they had financial problems or not.

The answer to the rising tide of debt – and let’s not forget that the average British credit card debt is twice that of the average West European – has been an increase in the numbers of people opting out of repaying debt altogether.

There has been a significant increase in the numbers of people taking out individual voluntary arrangements (IVAs) to say goodbye to most of their debt. People like these because their interest is frozen, a payment is agreed and then at the end of five years most of the debt is written off. There are even some who are going for bankruptcy. Research from debt consultancy Thomas Charles showed that the number of people seriously considering bankruptcy had increased by more than 27 per cent in the last quarter to 1.4 million.

And what about those of us who slog along trying to repay the debt? Well, we’re likely to experience the fallout in terms of higher bank charges and stricter approaches to bad debt. This is already happening and some pundits are predicting that the rise in bad debt could spell the end of free UK banking.


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