Countering the cost of credit card debt
A recent report from the Bank of England shows that UK credit card debt in November rocketed to its highest monthly level since 2004, as pressure increased on households due to the cost-of-living crisis.
The review showed that individuals borrowed £1.5bn via all forms of consumer credit, of which £1.2bn was on credit cards.
It is thought that the sharp increase in living costs over the past year has been a major factor. And with the recent increases in interest rates, households may be turning to credit cards to finance essential expenditures.
Mortgage approvals also fell to 46,100 in November, down from 57,900 in the previous month. Compare this to November 2020 with over 100,000 approvals when a stamp duty holiday was in place and it is clear that the landscape has changed.
However, economists indicate that the stock of consumer credit remained as much as £18.4bn below a peak seen in January 2020, and that households continued to save at a faster-than-normal rate in November due to fears over unemployment, higher interest rates and a drop in the value of their financial assets.
In the insolvency world, we often see an increase in credit card debt being built up over the festive period, with people then reviewing their finances in the early months of the new year.
Debt Help Scotland
In Scotland, the Debt Arrangement Scheme (DAS) is an ideal way to counter the cost of credit card debt if it becomes a problem. Once approved, it allows you to freeze interest and charges on all of your unsecured debts included in the scheme. You then pay it off at an affordable monthly or other amount. Freezing the interest and charges can often make a huge difference in how quickly the debt can be cleared, even if you are paying the same amount (or even less) per month, as you repay your credit cards. It also protects any assets you have (e.g. your home) from action by creditors chasing for debts.
If you are currently struggling with credit card or other debts please don’t suffer in silence. Our highly experienced advisers can help you to find the right solution to deal with any problem debt. We offer free, confidential advice.
Contact:
Ian Brown
Senior Insolvency Manager
ibrown@thomsoncooper.com
Phone: 01383 628800
Mob: 07519 124657
Richard Gardiner
Partner
rgardiner@thomsoncooper.com
Phone: 01383 628800
Mob: 07872 376105
Maureen Walls
Senior Insolvency Manager
mwalls@thomsoncooper.com
Phone: 01383 628800
About the author
Ian Brown
Ian is an expert in the Debt Arrangement Scheme and Business Debt Arrangement Scheme, assisting individuals, sole traders and partnerships.
He also advises on personal debt solutions recommending the best option to resolve problem debt issues.