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6.7 million UK adults are facing a ticking time bomb of credit card debt

03 October 2016

Nearly 14% of Brits have had a credit card debt for at least three years.

New research from Gocompare.com Credit Cards has revealed that 13.8% of UK adults (6.7 million) have had a credit card debt for the last three years or longer, with nearly one in 10 admitting to a persistent debt of five years or more on their plastic.

The research also looked at people’s expectations of debt and credit card spending throughout the next 12 months:

  • 14% expect to have a credit card debt throughout the next year;
  • 7% will need to ask friends and family for financial help;
  • 6% will need to take out a 0% balance transfer credit card
  • 5% said they will need to take out a loan.

The survey asked people about their current credit card debt. 14% said they have had a credit card debt for the last 6 to 12 months; 8% for between 2 and 5 years, while 9% have owed money on their cards for more than 5 years.

Londoners were the most likely to have credit card debt with two fifths of those surveyed admitting to having a balance on one or more of their cards. They were also the most likely to carry debts over a long period of time, with 16% of Londoners with a balance saying they have had a credit card debt for more than five years.

In addition, 14% of Brits say they are seriously worried about their finances with 15% saying they tend to run out of money before the end of the month - a significant minority (6%) admit to relying on credit cards to make ends meet.

One in 10 of those surveyed said that their credit card and other unsecured debt was their biggest financial worry for the next two years.

Matt Sanders head of money at Gocompare.com, commented; “When you’re feeling financially squeezed a credit card can be an attractive proposition. Providing you pay off the balance before interest payments kick in, they can effectively give you a short-term, interest-free loan.  Credit cards can also be a useful budgeting tool, enabling you the flexibility to spread the cost of your purchases.  The danger lies in relying on plastic to buy everyday essentials – then debts can quickly spiral out of control.  Worryingly, our survey revealed that 6% of people are using their cards in this way, just to make ends meet. 

“Persistent credit card debt is a real problem for many people, trapped in a cycle of minimum payments and mounting interest.  Much of the money owed on credit cards is made up of the interest charged on the debt, so it’s important to try and repay the balance as quickly as possible.   If you can, pay more than the minimum repayment each month.  If you have more than one card, always pay off the most expensive one first.

“Another option is to switch your credit card debt to a card with an extended interest free period on balance transfers.  These cards usually carry a small balance transfer fee, typically around 3% but, are still worth considering if you can benefit from 0% on your balance for, potentially, a couple of years. There are also a wide range of fee-free balance transfer cards currently on the market with some cards providing up to 26 months 0% interest periods, which could be a better option for those who need less time to pay off their balace.”

See Gocompare.com's guide for more information on credit cards.

Tips from Gocompare.com to reduce and pay off debt

  1. Take control.
    When your statement arrives, don’t ignore it; your debt will increase as interest is added to the outstanding balance.
  2. Don’t just make the minimum repayment.
    Card issuers add interest to any outstanding balance so the longer you take to repay the debt, the more money you will owe.  If you’re debts are spread across more than one card, pay off the most expensive card first.
  3. Switch your credit card.
    Transfer your credit card balance to a card with an extended interest free period on balance transfers – these usually charge a small balance transfer fee of around 3% which will initially be added to the debt.  But, it’s still worth doing if you can get 0% interest for 41 months2. Alternatively, if you are unlikely to repay a significant part of your debt during the 0% interest free period, switch to a card with a low interest rate for the lifetime of the balance transferred.  This will immediately reduce the interest rate until the debt is paid off.
  4. Avoid fees for missed payments and cash3 .
    Card issuers typically charge around £12 for missed payments.  Avoid using your credit card as a cash card, the additional charges (between £1.50 and £5.00) make this an expensive way to borrow money.

- ENDS -

Notes to editors:

The 6 million headline figure is derived from the 48,913,000 UK Adult population (source: Annual mid-year population estimates for the UK, 2014).  From our survey, 13.8% of UK adults have had a credit card debt for the last three years or longer so, 13.8% of 48,913,000 equals 6,749,994.

1On 18 July 2016, Bilendi conducted an online survey among 2002 randomly selected British adults who are Maximiles UK panelists.  The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.

2Based onVirgin Money Virgin 41 Month Balance Transfer Credit Card offering 0% balance transfer rate and period fixed for 41 months (4% fee).

3Defaqto Matrix of 243 credit cards - instant and unbiased market and competitor intelligence, from independent financial researcher Defaqto (29 July 2016)