Brits juggling many credit cards

According to a recent report many Brits are juggling multiple credit cards and continuing to get themselves into debt despite the credit crunch and despite the financial woes that many households are facing due to higher energy, food, petrol, and mortgage costs.

Figures show that over three million Brits have five or more credit cards that they are spending on, and this could simply add to the already massive personal debt problem in the UK.

Although financial markets are in turmoil and credit conditions are tight due to the global credit crunch many Brits are continuing to spend way above their means.

A third of Brits are said to have applied for another credit card over the past year, and those that have been turned down due to difficult credit conditions will also have adversely affected their credit profiles.

There are already concerns over the amount of personal debt in the UK, with industry officials expecting an increase in the number of people that will become insolvent over the course of the year.

One industry official said that getting another credit card is fine if it is to reduce debt – for example getting a 0% balance transfer card to save money on interest on existing credit card balances – but he said that consumers that are simply accruing credit card debt could hit problems in the future.

He said: ‘It is entirely healthy if people are swapping debts from one card to another, taking advantage of 0% deals to ensure that they pay as little interest as possible. But anyone who is trying to juggle five or more credit cards and owes money on all of them is in real trouble.’

Borrowing costs rise despite base rate cuts | Money | guardian.co.uk

The cost of borrowing £1,000 through a personal loan has risen by 4.5% since last March, as the credit crunch has forced lenders to increase interest rates, latest figures show.

The statistics from financial information provider Moneyfacts show the average APRs on unsecured loans of all sizes have risen since March 2007, even though the two recent cuts in the Bank of England base rate have brought it back down to the same level it stood at a year ago.

Those taking out the smallest loans have been hardest hit, with the average APR on a £1,000 loan increasing from 14.4% to 18.9%.

The average APR on a £2,000 loan has increased by 3.9% to 17.9%, while a £3,000 loan now attracts a rate of 15.5% - 3.8% higher than March last year.

Borrowers taking out larger loans are also paying more than those who did so last March, although the gap between rates isn’t as large.

On a £5,000 loan average rates have risen 2.1% to 10.1%, while on a £25,000 loan they are 1.2% higher at 8.1%.

“Anyone looking to take out a loan in 2008 is going to find themselves faced with having to shell out more by way of monthly repayments than they would have done over the last couple of years,” said Michelle Slade, a Moneyfacts analyst.
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FinanceDaily - 70 Days of Salary to Clear Debt Interest Alone

With personal loan debt almost four times higher than last year, even our combined January and February earnings are not enough to pay off the interest on our debt – without actually even reducing it, new figures reveal.

As a nation, we have worked the last 70 days solid to earn enough money just to service the interest on our credit card and loan debt, let alone re-paying the actual debt itself, according to new figures from Unbiased.co.uk.

The site has hailed today, Monday 10th March, as Debt Freedom Day. This is a stark increase from last year, when Debt Freedom Day was the 1st February 2007, meaning we only spent 31 days to service our debts.

The figures show that personal loan levels in the UK increased to £9.8 billion, from £2.6 billion last year. At the same time average interest rates on personal loans are now 0.5% higher, which means that Brits pay almost £1.5 billion in interest payments alone. Credit card debt in contrast has dropped slightly, decreasing from £55.6 billion to £54.9 billion.

Personal debt levels in general have increased by over 10% over the last year and average levels of interest payable on this debt has increased by over 6% - making the proportion of income needed to service this financial burden even greater.
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