Outstanding credit card balances grow by 9.5%

UK Finance has this morning published new data showing that outstanding balances on credit card accounts grew by 9.5 per cent over the twelve months to February.

Newspage asked brokers for their views and whether they’re seeing evidence of this. One said,“Many of the borrowers I deal with have far more unsecured debt these days, often worrying amounts, which they are then looking to consolidate into their mortgage.”

Another added, “Unfortunately, this rise in balances isn’t due to lavish spending and extravagant lifestyles. It’s just day to day living.”

Simon Bridgland, broker and director at Release Freedom said, “This data explains why so many brokers are needing to arrange product transfers instead of getting clients the very best deal in the market via a remortgage.

“The level of personal debt some clients are paying is vast. Many of my clients clear less than half their balances each month and so they have no choice but to stay with the current lender, in a no-questions-asked scenario.

“Thankfully lenders have been pretty switched on in recent years and offer some very good transfer rates compared to their new rates, which does help significantly.

“But if the client wants or needs to change lender then it cannot always be done, which is another reason we have so many people caught in the grasp of closed book lenders, unable to do anything but sell.

“Ultimately the client is still saddled with blistering payments in some circumstances with not real solution other than to perhaps downsize which is often impossible.”

Michelle Lawson, director at Lawson financial said, “More money on plastic is completely unsurprising giving the rising costs of living and higher interest rates.

“Many of the borrowers I deal with have far more unsecured debt these days, often worrying amounts, which they are then looking to consolidate into their mortgage.

“The regulator should really look at how borrowers can rack up such dangerous amounts. Some lenders will approve multiple loans and credit cards for an applicant with no or little protection or affordability for the more financially vulnerable.”