United Kingdom

Rise in consumers struggling to pay back credit card bills, say lenders

August 2019


  • 25 per cent of lenders say they have seen an increase in the number of consumers unable to pay credit card bills
  • The availability of secured credit to households has dropped
  • Interest-free periods are predicted to fall ‘significantly’ over the next quarter


Credit Card Spending

One in four lenders has seen an increase in consumers being unable to pay credit card bills, according to the Bank of England.

Data published in the bank’s Credit Conditions Survey found that 25 per cent of lenders had seen a rise in the default rates on credit card loans in the second quarter of the year.

This is the highest level since 2017 and follows a 23 per cent increase in the first quarter of the year.

The survey also found that the availability of secured credit to households had gone down 6 per cent over the quarter, following a 6.5 per cent increase in the first quarter of the year.

Lenders predicted the length of interest-free periods for balance transfers would decrease ‘significantly’ in the next quarter of the year, meaning that borrowers will have less time to pay back their debt before they get charged interest.

The report said: “The length of interest-free periods for balance transfers and new purchases on new credit card lending both decreased significantly in Q2. In Q3, the length of interest-free periods for new purchases and for balance transfers were expected to decrease and decrease significantly, respectively.”

The Bank of England reported that the overall credit card debt in the UK hit £72.5bn earlier this year, according to the Independent.

Recent research from the Trades Union Congress found that unsecured debt as a share of household income was 30 per cent in January - the highest it had ever been, including above the 2008 level before the financial crisis, which was 27.5 per cent.

How employers can help

Martin Parish, Area Director at Aon, highlights that “financial worries can be a major cause of stress for employees, and employer proactivity may have a positive impact on how employees feel about their personal financial situation. Running financial education programmes can help employees have a better understanding of budgeting and both their short-term and long-term financial prospects, and help them identify priorities and goals. Any financial wellbeing activity can be supported by financial management tools such as Well One Money – providing a holistic overview of an individual’s net worth, helping people make informed decisions and providing tailored guidance to help them reach their financial goals.”

Financial education programmes by Aon

For more information or to discuss any of the issues outlined in this article, please get in touch by emailing us at [email protected] or call us on 0344 573 0033.


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