Thursday 2nd of July 2009
Cash-strapped credit card customers are being given a total £8.8 billion of unrequested credit, new research has revealed.
Individual voluntary arrangement (IVA) advice could be required by borrowers after uSwitch.com stated that such credit offerings pushed up the average credit card limit from £5,129 to £6,667.
This increases the typical interest bill from £800 to £1,040, although an IVA could freeze the interest on credit card debt, allowing customers to better manage their outstanding balances.
Over the past 12 months, just a third of four million people have had their credit card limit increase applications turned down, the website noted. This could leave two-thirds of this group needing IVA help should they find they slip further into the red now their debt has increased.
Louise Bond, personal finance expert at uSwitch.com, said that unless Britons are one of the 68 per cent of people that "regularly pay their credit card bill in full, keeping high levels of debt on interest bearing credit cards isn’t advisable as it’s an expensive form of borrowing".
The government has recently announced a ban which should stop lenders sending out unsolicited credit card cheques to borrowers.
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could offer helping hand to cash-strapped households
