Consumers getting wiser with credit cards
June 19, 2007
According to recent reports consumers in the UK are getting far wiser when it comes to using and repaying their credit cards, despite the growing concerns over rising consumer debt and bad debt levels.
Credit cards have resulted in huge levels of debt for some consumers, but this is generally in cases where the consumers loses control of their spending on the card and does not exercise sensible habits when it comes to making repayments on the balance of the credit card.
Around fifty percent of credit card users in the UK, however, are now being sensible about their repayments, paying off the balance on their credit cards in full at the end of each month.
Research was carried out by the Consumers Credit Counselling Service, which indicated that half of credit card users in the UK are now making full repayments on their balances in order to avoid costly interest charges and to reduce the chance of getting into unmanageable debt or incurring various charges.
One official from the Consumer Credit Counselling Service stated that unless consumers make an effort to repay the card in full at the end of each month, or at least to pay as much as possible, they could find themselves in debt for many years to come. One spokeswoman stated that it could take years to clear a relatively modest balance if consumers only make the minimum payment.
She said: “If you borrow £2,000 on the average credit card, never borrow another penny… and just pay the minimum amount, it’s going to take you 20 years to clear that.”
In the meantime, of those that do not clear their balances each month, around 4-8 percent end up getting themselves into serious debt through their credit card spending, with half of these getting into trouble because of unforeseeable circumstances such as redundancy, illness, or accidents.
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