One in five (20%) North West adults has had an outstanding credit card balance for at least six months, while one in 25 (4%) has had an outstanding balance for over five years, according to a survey by insolvency trade body R3.
The research, part of a long-running survey of Britain’s personal finances, also found that one in three North West adults (34%) is currently worried about their level of debt, with credit card debt by far the most common cause of concern.
Paul Barber, North West chair of R3 and a partner at Begbies Traynor, says the results are of particular concern given the Bank of England’s decision to raise interest rates from 0.5% to 0.75% last week: “With low interest rates, lengthy interest-free periods, and little real growth in wages, credit cards have become a crutch for some households.
“While interest-free periods and transferable balances can help make things manageable, it is easy to be caught out and for small balances to snowball. People can lose track of spending and the total amount they owe. The recent rise in the Bank of England’s base rate underlines that borrowers can’t assume that the current low interest rates will be around forever.”
One in four North West adults (27%) said they did not have a credit card, while a further 38% said they had a credit card but had no outstanding balance to pay.
Paul Barber adds: “When taking on any new debt, including a credit card, it’s very important to have a plan for how to repay it. Taking on more debt or continually putting off repayments is not the answer and will only make existing financial situations worse. Credit cards aren’t a long-term solution for serious financial difficulties. Anyone worried about their debt should speak to a qualified and regulated expert to discuss their options.”
The survey found that of the 34% of North West adults worried about their current debt, almost half (44%) are worried about credit card debt, followed by overdrafts (27%), mortgage repayments and student loans (both 15%), bank loans (14%), and loans from family and friends (12%).