Brits' love affair with credit cards continues

02/11/2009

Consumers in the UK are still living a credit card lifestyle, a financial education charity has claimed.

Comments from Credit Action followed the publication of figures from the Bank of England which revealed that credit card lending to consumers increased by £0.1 billion during September.

The charity explained that compared with other types of lending, credit cards are "performing slightly better".

Chris Tapp, director of Credit Action, said: "I think it shows that we haven't seen the end of Britain's love affair with the credit card and a lot of people will be using existing lines of credit on credit cards and also seeking new ones."

He added: "A lot of people are reliant upon being able to borrow on their credit cards to smooth out peaks and troughs in their income and in many unfortunate situations they rely on cards simply to [cover] essential living costs."

Further figures from the Bank showed that total net lending to individual consumers rose by £0.7 billion during September.

Kevin Still, Eurodebt director, said: "Eurodebt's concern remains that too many consumers are using credit cards to balance the books every month and that this process of 'robbing Peter to pay Paul' will eventually catch up with them.

"Lenders can be less sympathetic where there is clear evidence of continued borrowing to the point when the cardholder decides they can't cope any longer or the card issuer steps in and starts to rein in the level of borrowing. A ‘debt spiral’ remains a very common reason sited at the face-to-face meetings with our debt advisors.

He added: "Unsecured debt levels may have doubled in a short period from where there was a deficit in the monthly budget to the point when professional debt advice was sought. Since the start of the recession, EuroDebt has seen average unsecured debt levels rise from over £24,000 to over £29,000, with homeowners at over £35,000. Our recommendation is to seek advice earlier."

Tags; Budgeting Advice,

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