Struggling Brits rely on credit cards to survive the crunch

10 July 2008 / by Daniela Gieseler
Brits could potentially incur a staggering £253.6billion debt on their credit cards, research from financial comparison website moneysupermarket.com has found.

The findings show that British card holders already owe £55.6 billion on their credit cards. However, as the average credit card limit per card holder has risen from to £8,234 from £6,000 last year, worryingly there is room for further expansion in debt.

While only 28 per cent do not have any credit cards, most Brits have at least one credit card and almost one in 10 have £20,000 or more available in credit.

Steve Willey, head of credit cards at moneysupermarket.com, commented: "The fact people could blow a quarter of a trillion pounds is alarming. This is surely a big wake-up call to all providers that they must take into account a person's total potential debt when they apply for credit cards.

"It's all well and good to give someone a £5,000 credit limit if they can afford it, but huge potential problems occur when that one person is given cards by many different providers each with a £5,000 limit."

He continued to suggest one possible solution: "In many countries, banks will give you a card on condition that you close a card with another provider. This is something the banks or Financial Services Authority need to consider."

Also, Mr Wiley urged consumers to use their credit cards prudently, to have the discipline not to take out too many different cards and only keep the latest and most competitive ones.

"It is smart of people to take out a new card with a long zero per cent purchase offer or generous cashback scheme, but they should be compelled to close the card it replaces."

© Fair Investment Company Ltd