Consumers Seek Credit Cards as Financial Difficulty Rises

Consumers are using their credit cards with more frequency according to a report conducted in the UK.  The report states that the average cardholder in the UK has increased the average balance of 6,000 pounds on their credit cards to 8, 300 pounds.  This is a 2,300 pound increase on almost all cardholders, for a total of 254 billion pounds across the UK.

The reason behind the increased use of the credit cards stems from the credit crisis that hit the UK last year coupled with inflation.  The prices on major products such as petrol, food, and energy have increased by such a significant degree it is almost impossible for the average home owner to pay their bills without supplementing their income with credit cards.

Steve Wiley the head of a credit card department stated that individuals could see a quarter of a trillion pounds on credit cards very soon.  It should be considered a wakeup call to the consumers and the credit card issuers that debt is going to get worse unless someone starts taking action.  Sure it is to the benefit of the credit card company to offer a 5,000 pound credit limit until that limit is reached and the consumer begins to default over the payments.  It can lead to several problems for the consumer that can’t be corrected over night.

This new report is on the eve of new data from the Bank of England.  The Bank of England is showing that the amount of outstanding balance on credit cards has increased by 666 million pounds just in May.  That is a 3 percent increase since May of last year.

Some of the debt experts are equally concerned about the number of individuals seeking debt assistance as well as the increase in the debt overall for credit cards and mortgages.  Consumers are just not able to pay down their debts with ease because any extra money is having to go to the bills for the month or emergency situations. 

Consumers are being urged to be careful with their credit card use.  In fact several experts are telling consumers not to use their credit cards at all no matter how desperate they feel.  Experts are actually saying it is stress and panic that leads many consumers to use their credit cards at a time like this.  It is not because they are in real need, but more that they panic and buy items or vacations that they can’t afford.  By paring down what the individual buys to just necessities and saving where they can in other areas they should be able to forgo the use of credit cards.

Unsecured lines of credit like credit cards and debt consolidation loans are not as easy to obtain this year as they have been in the past.  This means that consumers really need to be careful that they don’t run out of options by racking up credit card debt to the limit of every card.

Back To Credit Card Updates July 2008