The Credit Card Market study has found UK consumers account for 70% of credit card debt in Europe, despite only making up less than 10% of the population. UK consumers owe £56.9 billion in credit card debt, with 30 million people owning at least one.
The FCA believe high risk borrowers are being accepted for credit cards, leading to over-borrowing and an increase in personal debt levels across the UK.
There are currently around 59 million credit cards which have been issued in the UK alone, with the average cardholder owning more than two credit cards.
Stuart Carmichael, Trustee at Debt Support Trust said,
“We are living in a balance transfer merry go round
The study will be concluded on January 5th but so far the research appears to show a worrying trend of unnecessary borrowing or to repay debts.
The FCA study aims to find out whether or not more can be done to stop people borrowing more than they can repay or using credit to pay other debts.
The regulatory said it’s objectives are to,
- secure an appropriate degree of protection for consumers
- protect and enhance the integrity of the UK financial system
- promote effective competition in the interests of consumers
FCA director of policy Christopher Woolard said,
“We want to understand in more depth what drives consumers to make the choices they do and how firms develop the services they offer,”
Dealing with Credit Card Debt
While credit cards can provide an important financial service, it’s can also be easy to fall into spiralling debt problems with them. There are step everyone should take to avoiding getting into debt with their credit card or dealing with debt when it occurs.
Compare Offers: By taking the time to check the credit card market for the best possible deal people could find a better rate of interest, longer interest free period and much more.
Repay During Interest Free Period: If someone is able to get a credit card which has an interest free period it’s vital they repay anything borrowed before it ends.
Budget: By setting a budget people will know how much they can afford to repay and in some cases they may find they have a greater disposable income than they realise. The budget could help people find areas where they could save money and therefore avoid taking a credit card.
Seek Debt Advice: If credit card debt does become too much to handle people should seek charitable debt advice.