Defaulting debtors 'create debt management difficulties'
Defaulting debtors 'create debt management difficulties'
- Monday, 27 April 2009The rate at which debtors are defaulting on their credit card repayments is making it more difficult for others to
eliminate credit card debt, it has been noted.
Michelle Slade, spokesperson for financial information provider Moneyfacts, explains that lenders are increasing the rates they charge on credit cards to make up funds lost due to defaulting borrowers.
She adds that unsecured lending such as credit cards is typically the first area in which defaulting occurs as individuals focus on debt management in secured loan areas - such as mortgages.
"The risk of a customer defaulting on their credit card has gone up and we are paying for this extra risk through higher rates," Ms Slade comments.
As a result, the opportunity to
eliminate credit card debt could be diminishing for borrowers whether they face repayment issues or not.
Ms Slade stresses that all credit card users should avoid the temptation to make cash withdrawals on their plastic, due to the relatively high charges and interest rates incurred when doing so.

Recent Debt Management Plan News
56% of Brits have no life insurance which could leave family with debt problems
Wed, 04 May 2011More than half of UK adults currently have no life insurance cover, which could mean their loved ones are left with
debt problems when they die...
Brits thinking about retirement advised to seek debt advice
Tue, 03 May 2011Consumers considering their retirement options have been advised to seek professional advice, as they may end up with
debt problems in the future...
Brits planning to attend a wedding should start saving to avoid debt problems
Thu, 28 Apr 2011Consumers concerned about getting into
credit card debt to pay to attend a wedding may want to use their savings instead...
Couples planning their big day can avoid debt problems by negotiating a cheap wedding
Wed, 27 Apr 2011Couples-to-be worried about needing
debt advice in the future after paying for a wedding can ensure they avoid accruing
debt problems by negotiating a cheap wedding...