Credit cards are getting more expensive according to new data released by Moneyfacts which revealed that credit card borrowing is rising by around £3 billion year-on-year and £318 million of debt on plastic was written off in the first quarter of 2018.
The report says that it is more likely than not that interest rates will rise in the future, and with growing economic uncertainty, these figures alone should be a cause for concern for any consumer with mounting credit card debts.
Rachel Springall, Finance Expert at Moneyfacts, said “Consumer debt on credit cards is on the rise and so is the cost, in the form of interest. As per the latest statistics from The Money Charity, the total credit card debt in the UK sits at £71.1 billion, which translates to £2,613 per household on average (up from £68.08 billion, or £2,521 per household, a year prior). In addition, our own statistics show that it’s not just the average credit card purchase rate and cash per annum rate that increased over the last quarter, as cash withdrawal fees rose too.”
“The rise in consumer debt is cause for concern, particularly as £318 million was written off during Q1 2018. So, while many card providers are poised to offer introductory interest-free deals aimed at customers planning a purchase, balance transfer or money transfer, customers could nonetheless struggle to repay their debt before interest applies and, in the worst circumstances, require a write-off. Indeed, UK Finance found that 55.6% of credit card balances were bearing interest in Q3 2017.”
“Clearly, there are many consumers out there struggling to cope, and while credit cards are considered a common way to carry debts or switch them to an interest-free deal, this is only a temporary fix that simply buys a little more time to pay debts back. Without diligence, a growing debt could overwhelm customers and dent their chances of being approved for important financial milestones such as a mortgage”