Almost a third of credit card users have no intention of paying off the balance of their card in the next six months, moneysupermarket.com has revealed.
It appears borrowers between the age of 20 and 29 are the least likely to pay off their debts in a hurry, with 38 per cent admitting they would hold an outstanding balance on their credit card for more than six months.
A new report by PricewaterhouseCoopers (PwC) suggests the level of bad debts on credit cards now stands at six per cent, but it could hit nine per cent by the end of next year – with PwC claiming lenders could soon be prompted to introduce annual fees for borrowers to combat these bad debts.
Following this report, moneysupermarket.com is now urging credit card users to clear any debts they create from Christmas shopping as soon as possible.
According to the price comparison website, a typical credit card with a balance of £2,000 and an industry average rate of 18.21 per cent APR, with payments split equally over six months, would incur around £144 in interest payment.
Commenting, Peter Harrison, credit cards expert at moneysupermarket.com, believes the PwC findings set a "very worrying scene".
"People must be extremely careful about carrying debt on credit cards for long periods of time – you don't want to be paying for this year's presents when the Christmas decorations are rolled out again next year; particularly as rates could be at new dizzy heights.
"With interest rates rising on many cards, minimum repayments often only barely cover the interest accrued on the debt. By paying just the minimum borrowers could spend most of their life paying a credit card company a monthly sum on a debt as small as £500," he said.
Offering borrowers advice on how to reduce outstanding balances on their cards, Mr Harrison suggested taking out a card with a zero per cent introductory offer on balance transfers, which he says will offer borrowers a "better opportunity to clear the debt".
© Fair Investment Company Ltd