Data reveals shocking extent of credit card debt denial

There has been much talk recently about how council tax and utility bill debt have usurped more traditional forms of arrears, such as credit card debt. Debt charities have said enquiries about the former now account for the highest volume of calls from members of the public. Some have suggested that the rise in prominence of council tax and utility bill arrears is a sign that debt today is much less about reckless and uncontrolled spending and more about the fact that household income is failing to keep pace with rising prices. While this is undoubtedly a major contributor to the UK’s increasing debt problem, it would be naïve to suddenly dismiss other forms of debt as being a thing of the past. Indeed, a look at some recent figures in relation to credit card debt suggests that it is still very much a problem. Even more worryingly, perceptions and attitudes towards credit card spending are showing minimal signs of improvement.

As reported in Moneywise magazine, data provided by peer-to-peer lending firm Zopa has revealed the true extent of credit card debt that still exists in Britain. According to their research, people in this country have an average debt of £4,500 that could take up to 17 years to pay off. It found that two-thirds of credit cardholders are not following the standard advice of settling their balances in full every month and, instead, are only paying interest on their balance each month, with 20% paying only the minimum amount. By using credit cards this way, borrowers can take up to 17 years to repay the average debt of £4,500 and, due to the interest they will have incurred, will actually pay back more than double the original debt.

Astonishingly, more than half of borrowers in the UK are unaware of how much their credit card provider charges in interest, with research showing that people pay back their debt at an average interest rate of 17.9%. These findings are at odds with the unrealistic expectations that many Britons have about when they will be debt-free, with many claiming that it will take an average of just three years and 11 months to pay off their credit cards. Less than 3% of debtors thought they would still be paying off their credit card debt after 16 years, and only 13% believe it will take more than 10 years to be free from debt.

Unsurprisingly, this is doing little to ease the anxiety and stress among those in credit card debt with nearly two-thirds admitting their situation was unmanageable and more than a quarter feeling overwhelmed.

Such an analysis into credit card debt shows that mismanagement of it remains rife, as is an understanding of the implications of adopting such ill-advised practices for paying it off. The reality is that by simply making minimum interest payments, borrowers are increasing their level of debt and length of time it will take to pay it back. This adds to the debt problem rather than relieving it.

If you are struggling with credit card or any other kind of debt, contact CTAS today for free and independent advice on how to deal with it effectively.

As Featured In

You can get free debt advice from Money Helper,
an organisation set up by the government to offer free and impartial advice to those in debt. Just click the link above to find out more.

Council Tax Advisors is a trading name of Ruby Holdings Limited.
Registered in England and Wales, Company Registration Number: 09496123
Registered office: 103 Bradley House, Radcliffe Moor Road, Bolton, Lancashire, BL2 6RT.
Data Protection Number: ZA130896
Financial Conduct Authority Reference Number: 763879
We Are Here For You
If you want to consolidate your debt or are looking for advice with bailiffs, see how we can help.