Credit card boom sparks debt concerns

September 27, 2013 No Comments

Unsecured credit debt hit a record breaking £8.4 billion last month, sparking a wealth of debt management opportunists looking to capitalise on the demand.

As the economy begins to prosper once more, unsecured credit facilities seamlessly grow in tandem.

According to the most recent British Bankers’ Association report, consumers borrowed a record breaking £8.4 billion on their credit cards last month, with Britain now owing a total of £38.7 billion in overall credit card debt.

In August 2007 – at the very beginning of the financial crisis – £7.2 billion was borrowed on credit card facilities, with the total outstanding at £29.4 billion.

The BBA claim that the credit card boom could be a sign of a ‘growing consumer confidence’, following a time when there were concerns over taking on debt during a time of financial uncertainty.

Debt analysts however, are warning that spending on credit cards is a classic sign of financial problems, as it is one of the easiest ways to obtain money quickly.

Unlike many forms of unsecured personal loans that are subject to compliance via banks and building societies, it is very easy to borrow money from credit card suppliers.

Though, in truth, there are a number of opportunists who will look to capitalise on the relentless borrowing – as inevitably, there are those that become all too comfortable with unsecured credit.

Speaking to the Daily Mail, a spokesman said: “many people have to resort to using their credit card simply to cover their essential household bills.

“We know that people will often over-estimate their ability to repay borrowing and that this can leave them in a deeper financial hole.

“Lenders need to ensure that credit is being lent safely and appropriately and that it does not exacerbate existing financial vulnerability.”

On the other hand, mortgage approvals have hit the highest number since December 2009 – which could see an increase on national house prices.

The BBA said that its members approved 38,228 mortgages in August, up from 37,428 in July and more than a quarter higher than in August last year.

article by debtmanagementtoday.co.uk


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