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|StepChange Debt Charity responds to 50th anniversary of the credit card|
|Wednesday, 29 June 2016|
This week marks the 50th anniversary of the introduction of the UK’s first credit card. The market has changed significantly in that time and credit cards are now the most common type of debt seen by StepChange Debt Charity.
Over 200,000 people contacted us for help with credit card debts in 2015
They owed £1.7bn in credit card debt, which represented 41% of the total amount of debt we saw in 2015
On average, clients with credit cards have outstanding balances of £8,403
66% of our clients have at least one credit card and 38% of that number have 3 or more
Those with credit cards have an average of 2.5 credit cards
31% of the individual debts we see are on credit cards, making them the most common type
Mike O’Connor, Chief Executive of StepChange Debt Charity, said: “Credit cards have changed the way we spend. More than half of us now hold at least one and we rely on them more than our European neighbours. In the half century since their introduction, credit cards themselves have also changed. Conceived as a short term cash advance to save people carrying so much cash, they have now become a near-universal way to borrow.
“Although credit cards can be a cost-effective way to borrow, for many people they have become very expensive, long term debts. Last year we helped more than 200,000 people with £1.7bn of credit card debt. The average credit card debt we see is now at £8,403, about half our clients’ average annual take-home pay, and there is a clear need for change.
“The upcoming review of the market is a chance for the Financial Conduct Authority to reform credit cards so that they work better for consumers, particularly those who find themselves in financial difficulty.
“Small changes to existing rules, such as increasing or fixing minimum repayments, could save people thousands of pounds and cut years off repayment periods. Making credit card limit increases opt-in, rather than opt-out, could stop more people being trapped in long term debt.
“Strong action on credit cards can help ensure that they are used as the affordable, short term product they were designed to be.”
Reform of credit card limit increases and minimum repayments
StepChange Debt Charity has previously called for an end to unrequested credit card limit increases, which it believes are making debt problems worse for thousands of people. A recent survey showed 54% of its clients had received an unrequested limit increase, making debt problems worse for half of them.
The charity has also called for changes to minimum repayments on credit cards, which it says could cut both repayment periods and the amount of interest paid.
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