Debt problems from cards deepen
02/02/2011Debt problems from credit card borrowing could be about to peak as it's been revealed rates on plastic have hit a 13 year high.
According to studies carried out by Moneyfacts Group the typical rate for new customers is at a 13 year high of 18.9 per cent - from a low point of 14.8 per cent in February 2006.
These debt problems are affecting consumers because lenders are concerned about payments being defected - and this risk has been passed on to consumers with credit cards.
Spokesperson for Moneyfacts.co.uk Michelle Slade says: "Borrowers with £5,000 debt on their card, who repay the minimum each month, will now repay an additional £2,360 over the life of the debt compared to February 2006."
Debt reasons are becoming worse because customers who would normally switch lenders now find that this isn’t quite as easy to carry out.
Debt expert Kevin Still says: "Whilst the Bank of England has kept the base rate very low the credit card issuers have been raising rates to both new and existing borrowers, with serious consequences for those with substantial levels of credit card debt.
He added that "high interest rates and only being able to afford minimum debt repayments means that it can take decades to clear debts." 
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