Tuesday 21st of July 2009
Individual voluntary arrangement (IVA) support could soon be needed by some Britons who rely on their credit cards.
Lenders have decreased the period of free balance transfers on zero per cent credit cards, as well as reducing deals by up to a fifth, research from Moneyexpert.com stated.
Cash-concerned borrowers could therefore make more credit card applications in order to obtain cheaper credit, but they face damaging their credit ratings if they are rejected for a number of products, Pierre Williams, head of research at the website, claimed.
Rather than taking on more plastic debt, borrowers may prefer to seek IVA help. An IVA can freeze the interest on credit card balances, giving breathing space to Britons who hope to clear what they owe before falling deeper in the red.
"There’s a real danger of a vicious circle here for borrowers reliant on zero per cent deals," Mr Williams stated.
A typical £12 is charged to Britons who default on their credit card repayments, lovemoney.com recently revealed, which could push up the balances of borrowers further.
By Rachel Powell
- 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
- IVA could be a better choice than selling debt
