Missing payments adds to credit card debt

Missed payments are adding to credit card debt and damaging credit files, new research has revealed.

A study by Moneysupermarket.com has found that 17 per cent of consumers missed at least one repayment on a bill last year, with credit cards being the most common unpaid figure as four million people failed to keep up with these.

Geographical variations in such non-payments were present, with 11 per cent of Londoners failing to pay compared with only two per cent of consumers in Northern Ireland.

Other non-payments included mobile phone and utility bills, as well as council tax.

Head of banking at the website Kevin Mountford remarked: "Avoiding paying a bill might not seem like a big deal, but the consequences can be far reaching for your credit rating and can have a knock-on effect when applying for a new card, mortgage or securing any kind of credit."

And the site noted people can add to their credit card debt by incurring on-payment charges.

For those whose non-payment is down to an increasing inability to pay amid rising bills and falling income, the best solution may be to take out an individual voluntary arrangement (IVA).

This can aid those who owe £15,000 or more by negotiating a lower repayment amount with creditors in a deal that will be binding on all of them provided 75 per cent of those owed money agree to it.

IVAs are now more popular than bankruptcy as a means of dealing with severe debt, with Insolvency Service figures showing the former method was used more frequently in England and Wales in the final quarter of 2010.

By Joe White