Borrowers hit by 'staggering' credit card difference

11/11/2009

Thousands of consumers could be being weighed down by long-term credit card debts as lenders encourage them to stick to making only the minimum repayments on their borrowings.

Research carried out by Money Mail found that it can take more than two decades to pay off a £1,000 debt at just the minimum monthly rate, over which time a borrower would have paid back around twice as much as the initial sum.

Furthermore, borrowers who use their cards to make cash withdrawals are likely to be particularly hard hit, with those who opt to pay off just the interest and a little of their debts each month likely to be looking to debt advice for years to come.

Looking at a number of the most commonly-available products on the high street, the study found that borrowers are left paying three times more interest on some cards than on others, and can end up spending an additional 16 years paying off their credit cards when compared to those on a better deal.

Commenting on the findings, David Black, from Defaqto called the discrepancies "staggering".

"That is good for the card companies, because they can charge you interest on your debt for longer," he added.

This comes as Moneysupermarket.com has reported that around one in three UK consumers have no intention of paying off the balance on their credit card within the next six months.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

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