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Consumers continue to pile on credit card debt

Thursday, 29th November 2018

New figures from UK Finance reveals consumers spent £11.3bn on credit cards in October, this is 12.1 per cent higher than the same month last year. Over the past twelve months, the outstanding level of credit card borrowing grew by 5.7 per cent.

According to The Money Charity total credit card debt up to September 2018, was £72.4bn. In December 2017 this was £70.1bn.

UK Finance figures show that 55.1% of credit card balances were bearing interest in September 2018.

Other forms of borrowing

Personal borrowing through loans and overdrafts grew by 2.3 per cent in the year to October.

Eric Leenders, Managing Director, Personal Finance at UK Finance, said:

“Households are taking a measured approach to credit, with repayments on credit cards broadly in line with spending. This reflects the growing preference of customers to use their credit cards as a means of payment rather than a borrowing mechanism, making the most of additional consumer protections and value-added benefits.”

Mike Thomas, Founder of DebtWizard.com said:

“From my experience I have to disagree with the notion that consumers are racking up debt on credit cards purely to receive the protection under S75 Consumer Credit Act on any purchase in excess of £100. I have seen too many people from all walks of life with way too much credit card debt, many of these were simply using the credit card to pay essential bills such as the mortgage or rent, energy and day to living costs such as vehicle fuel and food. None of these were aware of the S75 protection.

"Consumers need to remember a ‘Credit Card’ is a ‘Debt Card’, what you put on it you have to pay back. If they only make minimum payments then you will pay on average an additional £2.50 for every £1 spent on the credit card. Think about it, that makes a £3,000 credit card debt on minimum payments become £10,500 debt. £10,000 will become £35,000 that you eventually pay back. You wouldn't take out a mortgage or personal loan under these terms so why do it on credit cards.“

Full report can be read here - external link UK Finance: Household Finance Update for October 2018 – Release date 26 November 2018   

Help and advice for credit card debt

We offer five great tips on how to reduce that credit card debt, if you are making just minimum payments on a credit card then at least read tip number 3 as this is might just save you thousands of pounds and the time period it will take to clear the debt.

Help and advice for credit card debt – Five top tips (DebtWizard page)

Are you in debt but don't know where to start?

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You can see our full five-point guide here In debt? Don't know where to start?

Where to get 'not for profit' free debt advice

If you need more information on how to best manage your debts then look at our list of the 'not for profit and free' free debt help / advice agencies', they will not charge you fees for debt options.

UK Finance

UK Finance is the trade association formed on 1 July 2017 to represent the banking and finance industry operating in the UK. It represents more than 250 firms in the UK providing credit, banking, markets and payment-related services. The organisation brings together most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

 

 

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