Bad credit card debts 'will soar'

10/11/2009

Credit card bad debts may reach as much as 9 per cent of all outstanding balances by the end of next year.

According to accountancy firm PricewaterhouseCoopers, "Bad debts in the sector have reached historic highs."

This comes despite a "cooling passion" for credit cards, with borrowing down 3 per cent to £64 billion in the past year.

The number of credit cards in circulation has fallen by 8 per cent, it said, as the past year has acted as a tipping point for the willingness of people to take on more unsecured debt.

PwC pointed out that this new declining trend reflected not only consumer choice, but the decision of card companies to restrict new lending to customers who were more creditworthy.

Paul Rodford of Card Payments, the UK cards association, said the easy availability of credit cards would disappear.

Kevin Still Director of Debt Management Company EuroDebt says "We hope that the new lending code that came into effect on 1 November 2009 will have an affect on protecting indebted consumers where card issuers try and increase interest rates or impose fees on clients.

The average interest rate on credit card lending is currently 18.24per cent, which is 17.74 per cent above base rate (0.5 per cent)."

• Share
• 
• 
• Store
• 
• Follow
•