Increase in Credit Card Debt Write Offs due to High Levels of Debt and Repossessions

Tue, 29 Jun 2010

The high rates on credit cards have been caused by high levels of write-offs.

There has also been another increase in the amount of credit card lending written off by UK banks and other financial institutions.

In the first quarter of 2010, Bank of England figures showed that write-offs increased to £1.25bn. That was the second-highest quarterly amount on record.

Last year, a record £4.12bn was written off by credit card lenders, amounting to about 10% of all money lent on credit cards.

The amount of financial write off on mortgages dropped to £160m, the lowest quarterly figure in 18 months, with house prices rising once more and the number of repossessions dropping.

The number of repossessions the UK fell by 7.5% in the first three months of 2010, from 10,600 in the last three months of 2009 to 9,800.

The Bank of England's most recent Financial Stability Report shows that losses on credit card lending has been a key factor in increasing the interest rate margin charged.

The statistics highlight that the average UK credit card rate was 16.51% in April 2010, a little higher than the 15.2% in July 2007.

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