Relying on credit cards is said to be one of the reasons why so many families are swimming in debt.
This is according to Moneysupermarket.com, whic…
Relying on credit cards is said to be one of the reasons why so many families are swimming in credit card debt.
This is according to Moneysupermarket.com, which revealed that a third of UK consumers have increased their unsecured arrears in the last 12 months, driving up the typical amount an individual owed to £8,430 -excluding mortgages.
These findings follow the latest Aviva Family Finances Report, which found that the average household’s debt is now £5,878, rising by around £500 in the space of four months.
Although using plastic to pay for the everyday cost of living is convenient for some people, the price comparison site has warned that this is not necessarily the best solution for families with no disposable income, because for many, failing to clear these debts in good time can result in mounting charges.
Four per cent of people who rely on credit cards told Moneysupermarket.com that they only settle the minimum charge each month to free up some of their personal finances, while a tenth of consumers say they can only afford to make the smallest possible repayments.
Furthermore, the rates of plastic credit has skyrocketed to its highest level in 13 years, even though the Bank of England base rate has been at 0.5 per cent for more than two years, making is more vital than ever before to clear outstanding debts.
Tim Moss, head of loans and debt at the website, said: “Consumers need to remember that by only repaying the bare minimum each month, they will end up paying through the nose in the long term and will shell out considerably more in interest than the original amount borrowed.”
And the price comparison site also noted this week that a third of UK consumers have seen their personal debt rise over the past year, with seven per cent of people believing they will owe money for the rest of their lives.
By Paul Thacker