Millions of UK consumers have been found to have massive amounts of credit card debt, many in excess of a year, as revealed by a recently published report by a well-known financial news website.
With many borrowers only able to meet their obligations by making minimum balance payments due to the poor economic landscape, the report revealed that in excess of six million cardholders will be repaying their current debt for the next year or more thanks to high interest rates.
Carried out on behalf of financial reporting website moneysupermarket.com, the research claimed that nearly 10 per cent of all those currently paying off their debt can only manage to remit their minimum payment in any given month. As the minimum payment barely reduces a consumer’s debt due to high rates of interest, the result is that 14 per cent of card holders will take more than five years to pay their debts off completely.
Industry insiders have issued warnings to consumers who only remit the minimum required payment every month. They say this will extend the amount of time it takes to repay the debt by years because of the extra time spent paying off hefty amounts of interest. However, thanks to the banking crisis and resultant economic recession, there are many consumers who cannot afford to pay more than the minimum every month.
According to the survey, the average amount of time that credit card balances are left outstanding is 21 months, and financial industry experts have expressed a desire to educate consumers on both the consequences of carrying a minimum balance and on the way repayment structures work.
In other news, a recently formed review, launched by the government, will be examining current credit card policies and how to adapt them to be more fair to consumers.