A quarter of consumers struggle with credit card debts
December 28, 2010
According to recent reports around a quarter of borrowers are struggling to repay their credit card debts, and this is a figure that could get worse following the intense spending that has been done on plastic over the Christmas period and during the ongoing sales.
A report was released by the Bank of England showing that around 25 percent of credit card users were already struggling to cope with their credit card debts, and with so much spending having been done on credit cards over the Christmas period, and more expected over the New Year and during the sales, the number of people struggling with credit card debts could increase sharply.
Credit card companies are set to come under new regulation from this weekend, and this could go some way towards helping those crippled with interest costs charges by their providers, as it means that the credit card firms will have to allocate repayments to the higher interest debts on the card first rather than to the cheaper debts, as is the case with most providers at present.
For many people credit cards are the only form of credit that they can get due to factors such as their credit or financial status, and many therefore have no other option when it comes to borrowing. However, it is possible for those with decent credit to switch to a lower interest card, or even transfer their balance to a 0 percent balance transfer card, in order to make their credit card debt more manageable.
In its report the Bank of England stated: ‘Interest rates on unsecured debt tend to be much higher than mortgage interest rates and appear to have been less sensitive to the changes in monetary policy (interest rates).’
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