Consumers spend more than £5,000 every second on credit cards, the UK’s leading financial capability charity reveals today.
Figures in The Money Charity’s latest Money Statistics show that the total outstanding credit card debt is now at £61.2 billion, an average of £2,292 for every household. Every day, almost £8m is spent on credit cards – or £5,429 a second.
Many consumers benefit from lengthy interest-free deals, but when those expire the rate jumps to an average 17.85% APR.
The charity is calling for a ban on unsolicited credit limit increases, to put consumers in control of their borrowing. It also wants the minimum payment each month to only reduce if the customer requests it. At present the minimum payment reduces as the balance goes down – this greatly extends the length of time it takes to pay off the total debt.
Other figures in May’s edition of The Money Statistics include:
- Someone was made insolvent in England and Wales every 6 minutes 13 seconds;
- Consumer credit debt rose by £203 per person in the last 12 months;
- Citizens Advice Bureaux in England and Wales dealt with 6,407new debt problems every working day during 2014; and
- 5.2 million people have been automatically enrolled into a pension.
Michelle Highman, Chief Executive of The Money Charity, said:
“Putting purchases on plastic can be a great way to spread the cost of large items, or meet unexpected expenses.
“It can be really tempting to just ‘stick it on a card’ and forget about it – especially with contactless payments becoming more and more common. Unfortunately, you’ll have to repay it at some point, so there’s no better time than the present to get to grips with your money and use our free Budget Builder to work out what you can afford to repay.
“But these figures show just how big a part of our daily lives credit cards have become. So it’s especially important that the way they work keeps people in control of their borrowing, and that there’s help available at an early stage if they’re in difficulty.
“And if your debt feels too much to deal with, there’s free, impartial advice available from charities like StepChange.”