Credit Card Users Ignoring Debts

Tue, 17 Nov 2009

Nearly a third of credit card users have no intention of clearing their balances in the next six months, new research has revealed.

A study by price comparison website Moneysupermarket.com found that borrowers aged between 20 and 29 are the least likely to pay off their debts between now and May 2010, with 38 per cent content with having an outstanding balance on their credit card for more than six months.

The findings come as a new report by accountancy firm PricewaterhouseCoopers (PwC) shows the UK level of bad debts on credit cards is at an historic high of almost 6 per cent.

The company predicts that the figure could rise to 9 per cent by the end of 2010 as more and more consumers struggle to keep up with their credit card repayments .

To combat the increase in bad debts, PwC claims that banks and other UK lenders will hike up credit card fees and rates .

Peter Harrison, credit cards expert at moneysupermarket.com, said the PwC report was "very worrying" and urged users to clear their debts as soon as possible.

He commented: "People must be extremely careful about carrying debt on credit cards for long periods of time – you don't want to be paying for this year's presents when the Christmas decorations are rolled out again next year; particularly as rates could be at new dizzy heights. "

"With interest rates rising on many cards, minimum repayments often only barely cover the interest accrued on the debt . By paying just the minimum borrowers could spend most of their life paying a credit card company a monthly sum on a debt as small as £500."
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