Brits Charge £470 Billion To Their Credit Cards

A recent report from market analysis Datamonitor shows that Brits charged £470 billion to their credit cards in 2005. This is a massive 50% jump on credit card spending from 2001 figures. However, with UK credit cardholders becoming more aware of the cost of charging items to their credit cards, figures from the Bank of England that show Brits paid back £311 million more to their credit cards than they spent in August would seem to show that our attitude to credit card spending is changing.

Unfortunately, however, there is a section of British society that has come to depend on their credit card in order to be able to survive month-to-month. Making minimum repayments on their credit cards and then using the available balance to survive the next month has become a way of life. Unfortunately, however, with interest rates ranging from 15.5% to 19% being charged on the outstanding balance, the available limit diminishes each month until such time as there is a credit squeeze or the card issuer is willing to increase the credit card limit. This continued spiral of debt is causing increased debt concerns among Brits, with record numbers of us seeking out advice from debt counselors on how to break the cycle of debt we are in and with record numbers of personal bankruptcies now being recorded.

The picture is not all rosy for UK credit card issuers either however. The decision by the Office of Fair Trading that credit card issuers needed to slash penalties for late payment of credit card bills by UK credit cardholders has cost UK credit card issuers as much as £500 million in lost revenue since April 2006, according to Datamonitor. Moreover, more competition in the UK credit card industry has caused many leading UK credit card companies to reduce their annual percentage rates (APR). Most APR figure comparisons by Datamonitor show that average APR had dropped from 17.8% in June 1999 to 15.5% today.

Nonetheless, with more than 70 million credit cards issued in the UK, and with estimates that we will be charging as much as £639 billion to our credit cards in the UK by the year 2010, the UK credit card companies will not be too concerned that they’ll lose their livelihood just yet. Indeed, the only dark cloud on the UK credit card issuers horizon is whether or not the UK government will introduce new statutory measures to control the level of credit card spending in the UK, which significantly outstrips that by our European cousins.

Richard Smith
16th October 2006

More Information:

• Causes and Cures Of Credit Card Debt
  For some, credit cards can prove a temptation too far, and soon they find themselves in debt. Simple precautions will keep the savvy card holder from such dangers.
• Tips On How British Women Can Climb Out Of Their Growing Credit Card Debt
  More women in the UK are spending money on credit cards than at any other time. In percentage terms, there are now more British women spending more each month than they earn.
  

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