- Thursday, 2 July 2009In the past 12 months credit card providers have increased customers' limits by a total of £8.8 billion, heightening the risk of financial difficulty among consumers and the potential need for IVAs and other debt solutions.
Research from uSwitch found that the huge increase in credit was unrequested by consumers. The credit card companies took it upon themselves to give their customers larger overdrafts.
The average credit increase was £1,538, from £5,129 to £6,667. Subsequently, interest bills rose from £800 to £1,040.
It is this rise in interest that could cause problems for the consumer in the future and see a potential increase in the need for countermeasures such as debt advice and
individual voluntary agreements (IVAs).
Louise Bond, personal finance expert at uSwitch, said: " "In the current climate you could be fooled into thinking that increasing credit limits without permission is a good thing as it stops people going over their limits and incurring extra charges.
"Providers really aren't helping consumers by throwing cash at them as it could be placing unnecessary temptation in their path."
The £8.8 billion of extra credit forced on consumers could net the banks £5.9 billion in interest payments.
Recent IVA News23% of first-time buyers save for five years to raise a depositWed, 04 May 2011
Brits dealing with Finance Management should shop around for car insurance Wed, 04 May 2011
Parents, including those with Finance Management, advised to start saving for children's weddingsTue, 03 May 2011
Newlyweds may be in need of Finance Management plans after overspending on weddingTue, 03 May 2011
Renting rather than buying may be an option for Brits with Finance Management Thu, 28 Apr 2011
Consumers coping with Finance Management may want to shop around for cheap energy tariffsWed, 27 Apr 2011
Increasing number of Brits turning to loans for home improvementsWed, 27 Apr 2011
Brits, including those with Finance Management plans, to spend £267 on Royal Wedding Tue, 26 Apr 2011
Equity release can be used to 'become debt-free'Tue, 26 Apr 2011
| |
Money Debt and Credit Ltd, Registered in England & Wales No.05588842.
Registered Office: 45 Clarendon Road, Watford WD17 1SZ
Consumer Credit Licence Number: 0580960