Since 1966, UK consumers have enjoyed spending money on credit cards, using them to make big purchases they would otherwise be unable to afford or carefully building up credit over time with smaller purchases that they pay off regularly.
Fast forward to 2016 and 60 million credit cards are in circulation in the UK – as of last November – and with this accumulation of credit, there have also been cases of debt. Let’s take a look at the facts, when it comes to credit card debt, delving into how much the UK spends and how to overcome debt if you are struggling:
Why is credit card debt growing?
According to The Money Charity, debt on credit cards recently totaled £65.7bn in September 2016, this works out around £2,434 per household. Compare this with your mortgage total and it doesn’t seem like a lot but the fact that it is unsecured debt means the interest can quickly amount to unmanageable heights and consumers can find themselves struggling to make ends meet.
The reason for more credit card debt is perhaps due to low interest rates being offered regularly by banks and building societies, which for those struggling to tackle the increasing cost of living may appear to be a security blanket in rough times.
However, while these credit cards offer an initial reprieve, later down the line interest and charges are added and if those using them aren’t prepared they can find themselves in a significant amount of debt. According to Moneyfacts.co.uk, credit card interest rates have increased to 22.3% today compared to 17.7% in 2009, which could be impacting those using them.
Contactless credit cards could also be encouraging spending, as the ease of simply swiping your card or even your phone allows you to not think about what you purchasing. Over £2 billion was spent using contactless cards in the month of July alone, this year.
Why are people seeking credit?
For many people, credit cards are there as an emergency net, should unexpected expenses arise. However, Money Supermarket believes credit cards are popular because they offer an abundance of benefits you wouldn’t enjoy with a normal transaction. These include protection on purchases when you spend over £100, cashback or rewards in return for spending, improvement to your credit rating and spreading the cost of larger items.
How can you get out of credit card debt?
If you are struggling with credit card debt it’s important you seek advice, to learn how you can overcome any increasing interest and charges that could be hindering your ability to make repayments.
Consider seeking iva advice. Using an Individual Voluntary Arrangement can help you manage your debt and help you get out of debt quicker.
Contact a free debt advice company and ask them about your options. They will look through your finances and explain what debt solutions may be available. Debts can feel isolating but it is important to know you are not on your own, expert advice is only a phone call away.
There are also a few immediate steps you can take yourself. Start by casting the credit cards aside, using them will only build up your debt level so do your best to steer clear. Instead set up a budget that outlines how much you can afford to spend after your bills and draw out cash to ensure you don’t overspend.
Leaving your debit cards at home when you go shopping will also relieve you of any temptation to spend more than your budget has allowed for. Becoming aware of your spending will help you to manage your money better so check your bank statements regularly and log in to your bill accounts to make sure you are paying the correct amount. If you are really struggling with your debts and need help however, there is only so much you can do on your own, talk to a debt adviser about the options available.