Credit card debt rose by a record £569million last month as customers apparently struggled to meet repayments. The figure was revealed by the British Bankers Association, which represents the major high street banks. However, when other credit card companies and building societies are included, the sum is likely to top £1billion. The Association puts the total amount outstanding on bank credit cards at an all-time high of £31billion, with the figure expected to be around £55billion when other card companies are included.
The BBA figures indicate that three interest rate rises since last November are beginning to put the squeeze on millions of families. For it appears that while finding the cash to pay higher monthly mortgage bills, they are allowing credit card debts to climb. And with the Bank of England predicted to push up interest rates in June and beyond, the situation can only become more difficult. Total personal debt is currently put at £973billion by the Bank of England, with the City and consumer groups expecting it to top £1trillion by the summer’s end.
Interest charges on credit cards and mortgages are bringing in a multi-billion pound profits windfall to the banks. Penalty charges for late and missed payments on cards are also generating a huge income. The BBA figures confirm the property market and associated mortgage lending boom is showing no signs of cooling. Statistics show that new mortgage lending totalled £16billion in April, the highest monthly figure since last November. At the same time, the total amount outstanding on mortgages with BBA members rose by a monthly record of £6.3billion to almost £478billion.
LibDem Treasury spokesman, Dr Vince Cable warned: ‘Rising bank lending is recklessly fuelling the house price boom. ‘The property market will become increasingly unstable as first-time buyers are priced out.’ He added: ‘Large numbers of people are gambling on the house price boom – a gamble they may well live to regret if house prices start to fall or interest rates continue to rise. It is time for the Government to take action to protect ordinary home owners against irresponsible lending.
(Daily Mail 29th May 2004)