Comment on Price Waterhouse Coopers' report on Consumer Credit in the UK

Published:

09/11/2009

Topic:

Press Release,Money,Credit Cards

Peter Harrison, credit cards expert at moneysupermarket.com, said; "The credit card industry seems to be fighting a war on two fronts, with regulators looking to impose stricter responsible lending practices and customer fairness rules on cards amidst rising bad debts.

"As a result consumers are likely to pay the price of increased average APRs, something we have already seen happen over the course of 2009. In January this year, the average APR was 17.06 per cent, this has now risen to 18.22 percent, and this means that for those only making the minimum payments on their credit cards with a balance of £2,500 it would take a further nine months to pay off the card with the new rate with an additional £213.33 in interest.

"The prospect of rising APRs means consumers need to ensure they are doing everything they can to reduce their credit card debts. Whilst this report suggests that credit card borrowing has fallen over the last 12 months, our own research* found that almost a third (31 per cent) of credit card users have no intention of paying off the balance of their credit card in the next six months, highlighting the reliance on credit remains.

"Sustainability and transparency are key to the future of credit card lending in the UK. With the current model looking less and less viable each day, the industry must adapt to survive. The increase in bad debt may see the introduction of annual fees which could bring about greater trust in this form of borrowing and ensure credit card customers are treated fairly, as long as it is clear and upfront and other 'hidden' charges are abolished as a result. Consumers should be aware that credit cards are likely to be more difficult to come by next year, so it is likely that borrowers will have to turn to their current account provider to obtain a suitable deal."

-Ends-

* Opinium Research carried out an online poll of 2008 British adults on behalf of moneysupermarket.com from 29th September and 2nd October 2009. Results have been weighted to nationally representative criteria.

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