Banks have written off a record amount of credit card debt despite charities reporting a fall in the proportion of calls from worried borrowers.

Credit Card Debt: May 2013

”The number of credit card transactions continues to rise, with daily spending now some £370 million, giving customers greater choice and flexibility over how they buy goods and services. The average monthly spend per account remains stable and a third of total balances at any time incur no interest charges at all.”

1. These data cover the world-wide transactions of UK resident holders of credit cards issued in the UK by financial institutions affiliated to the Visa, Mastercard or Amex organisations. Earlier data on the BBA website showing the split between Mastercard and Visa are no longer shown, due to certain institutions moving existing credit card accounts from Visa or Mastercard to Amex branding.

2. Seasonally adjusted credit card purchases used in the ‘number of credit card purchases’ chart reveal underlying trends and allow adjacent months to be directly compared with each other.  Lending growth allows for the effects of monthly write-offs, in line with data published by the Bank of England and other BBA data.

3. Data for January 2010 onwards have been updated to bring in amended and upgraded grossing factors used to estimate a small element of card usage not covered by formal data reporting; consequently data from then are not strictly comparable with earlier data.

4. The BBA is the leading UK banking and financial services trade association, representing its members, from 50 countries, on domestic and international issues. Our members provide the full range of banking and financial services, operating some 150 million current and deposit accounts in the UK and making up the world’s largest international banking centre.

 

Credit Card Complaints

Figures from the Bank of England show that the amount of money being written off by credit card lenders hit a high in the second quarter of 2010.

The value of write-offs jumped to £2.1bn in April, May and June, up from £1.3bn in the first quarter of 2010.

Lenders write off debt if they conclude that borrowers are unable to repay.

Separate data shows that many people have looked to pay off debts recently.

Last year, a record £4.1bn was written off by credit card lenders, about 10% of all the money lent on credit cards. That total looks likely to be exceeded by a wide margin this year.

However, the suggestion from charities is that, with a smaller proportion of calls this year, fewer people are facing critical credit card debt. But the latest Bank of England figures suggest that those who do face such debt are less likely to pay it back.

This may be the result of a loss of a job or shorter working hours hitting their income.

The Money Advice Trust – which runs the National Debtline – said that less than 60% of its callers were facing credit card debt problems, compared with between 66% and 70% in recent years.

However, this remains one of the largest debt problems, alongside overdrafts.

Citizen’s Advice said it had seen a slight dip in consumer credit debt inquiries, for ‘the first time in a long time’, in the three months from April.

Charity Credit Action said people should keep their lender informed of any payment plans they come up with after talking to debt charities.

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Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.