Credit card debt rising as minimum repayments fall
A number of credit card providers have chosen to reduce their monthly minimum repayment requirement in recent weeks, a trend which one firm suggests could see the level of credit card debt in the UK increase.
According to uSwitch.com, it could take nearly 30 years for the 3.5 million credit cardholders who make minimum repayments to fully pay off the average credit card debt of £1,812.
The firm notes that repaying debt off at three per cent each month, rather than two per cent could reduce the time it would take to pay off the debt by almost half.
Mike Naylor, personal finance expert at the firm, said: "In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325 billion … consumers could now finish repaying their mortgage before their credit card, despite the huge disparity in sums borrowed."
The UK payments association Apacs recently reported that consumers spent approximately £126 billion on their credit cards in 2006, more than twice the figure recorded a decade earlier.
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