Credit Card Indebtedness in UK Continues to Grow

Rising Credit Card Debt Means More Business for Debt Counselors

Aug 23, 2009 Neil Gunn

The International Monetary Fund (IMF) has reported that £1.5bn of outstanding European consumer debt, much of it in the UK, will not be repaid.

The IMF report also advised that the UK, which has highest number of credit card borrowers on the continent, is heading towards a US style scenario where around 14% of credit card debt will remain unpaid this year.

Credit Card Debt

Added to the credit card debt figures is the news that personal insolvencies in England and Wales, in the second quarter of 2009, have risen 27.4% on the same period in 2008 (Insolvency Service).

For many credit card debtors the prognosis is depressing, however there are a number of proactive steps they can take to help reduce the burden of personal debt.

Be aware of the danger of minimum monthly payments, the higher the payment the lower the interest charged. If possible try to make savings elsewhere and pay more to the credit card.

If possible transfer the credit card debt with the highest rates of interest to a 0% balance transfer card.

Debt Counselling Agencies

The debt counselling agencies listed below will give advice on household budgeting and if appropriate set up a debt management plan with creditors.

While there are understandable reasons for people to be nervous about seeking help consider the advice from Moneymadeclear.

Debt Problems

People may have a debt problem if they find themselves doing any of the following:

Using credit cards to take out cash advances to pay bills
Being tempted to take out a consolidation loan
Borrowing money without knowing how it’s going to be paid back.

If this is a familiar scenario it is probably time to get some free professional advice. For many, making the decision to go to a debt-counselling agency not only gives them a clearer overall picture of their debt but also the emotional release of finally telling someone else about their financial problems.

Barclaycard, one of the UKs biggest credit card issuers, has along with other card issuers noticed a rise in overdue payments and defaults in the first quarter of 2009.

They have offered their customers, who may be struggling with credit card debt, one piece of good advice. They say, “Don’t be persuaded to go to a debt management company” for help.

However it’s worth clarifying that they mean a debt management company which charges for their services.

The organisations listed below offer free and independent debt management advice.

Consumer Credit Counseling Service (CCCS)
Credit Action
Citizens Advice Bureau

The information in this short article is not exhaustive and does not constitute financial advice.

Sources:

Insolvency Service, Individual insolvencies in England and Wales, 7 August 2009

Jane Croft, Megan Murphy and Francesco Guerrera, Europe braced for credit card defaults, Financial Times July 26, 2009-08-23

Luc Laeven and Thomas Larea, Principles of Household Debt Restructuring, IMF June 26, 2009

Barclaycard online

Moneymadeclear, Dealing with Debt

The copyright of the article Credit Card Indebtedness in UK Continues to Grow in Personal Budgeting/Finance is owned by Neil Gunn. Permission to republish Credit Card Indebtedness in UK Continues to Grow in print or online must be granted by the author in writing.