One in 4 bank card customers pay payments late as money owed soar

One in 4 bank card debtors has paid their month-to-month invoice late – two thirds of them up to now yr – as rising numbers wrestle to maintain up with their money owed, new analysis reveals.

Fewer than half of bank card customers often repay their steadiness in full, in response to worth comparability web site Compare the Market. Soaring mortgage or lease, meals, vitality and gasoline prices have piled the strain on to family budgets, with the common bank card debt now reaching £1,160.

The UK financial system slipped into recession within the second half of 2023, as households in the reduction of on spending to handle struggling funds.

One in 5 bank card debtors have solely been in a position to make the minimal compensation on their most up-to-date invoice, Compare the Market finds.

Credit card holders spent essentially the most on on-line buying and holidays, with 16 per cent of debtors making use of for a brand new card earlier than travelling overseas.

Struggle: One in 5 bank card debtors have solely been in a position to make the minimal compensation on their most up-to-date invoice

Searches for bank cards and loans soared by 83 per cent between December and January as households tried to carry their outgoings again below management, in response to credit score examine agency ClearScore. Andy Hancock, chief progress officer at Compare the Market, says: ‘When taking out a bank card you need to be aware of not borrowing greater than you possibly can afford.

‘It’s worthwhile paying off your bank card steadiness in full each month to keep away from paying curiosity.’

Credit card APRs (annual share charges) have rocketed up to now yr, stinging those that cannot repay their steadiness in full with the best rates of interest since data started in June 2006, evaluation from charge scrutineer MoneyinfoCompare exhibits.

A typical new bank card deal now has an APR of 34.7 per cent, up from 30.3 per cent a yr in the past.

A borrower with the common degree of bank card debt of £1,160 who solely makes the minimal compensation every month and is charged a typical APR would now have paid £943 in curiosity by the point their steadiness is paid off.

Four in ten debtors now imagine that the size of a 0 per cent supply when transferring their steadiness to a different card is a key function when selecting a brand new bank card.

And 21 per cent say simply being able to switch a steadiness from an outdated bank card is essential, as a couple of in three beforehand used a steadiness switch card to keep away from paying excessive rates of interest.

When on the lookout for a brand new card, you need to use an eligibility checker to find out whether or not you might be prone to be accepted earlier than you formally apply as a result of a rejection may hurt your credit score rating.

Check whether or not playing cards have annual charges and costs, and mark the top of any introductory rate of interest in your diary to keep away from receiving a shock invoice.