One fifth of credit card users have missed payment in the last 6 months

Almost one-fifth of UK credit card users (19%) have missed a credit card repayment within the past six months due to the rising cost-of-living, according to new research by comparethemarket.com.

The research is published as the Office for National Statistics revealed that prices across the economy are rising by 9.1% a year, squeezing household budgets. Of those who missed a payment, one in two (52%) were charged a late payment fee, two-fifths (40%) damaged their credit score, and more than a third (36%) were charged interest on their repayments. Young people are more likely to miss a repayment due to the rising cost of living than older people. One quarter (25%) of those aged under 24 missed a payment in the last 6 months, compared to just 6% of those aged 55 or above.

The research also found that almost three-fifths (56%) say they rely on their credit card to spread out day-to-day spending in the face of rising prices. Almost one in two (48%) UK credit card users are worried about being able to pay off their credit card bills in upcoming months. Nearly a fifth (18%) have requested a payment holiday in the last six months due to the rising cost-of-living and 19% are considering taking a payment holiday in the next six months.

Alex Hasty, Director at comparethemarket.com, said “People are increasingly reliant on their credit cards to cope with rising prices. Although credit cards can be a safe and effective tool to help you manage your finances, you may have to pay additional interest and they do come with risks if you miss repayments.”

“One way you might be able to reduce repayments, or prevent having to pay more interest, is by switching from an APR credit card to an interest-free credit card, making repayments more manageable. You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card. That being said, it’s a good idea to avoid making several applications in a short period of time, as this will appear on your credit score and could temporarily reduce it. It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”