Credit Card and Personal Loan Defaults Up Sharply in Q2
July 14, 2017
The number of British consumers who defaulted on their credit card debts or their personal loans increased sharply in the three months to the end of June.
According to the Bank of England, the number of instances of defaults reported by lenders “increased significantly” during the second quarter of the year.
In fact, the jump was the sharpest from one quarter to another recorded by the Bank since 2009 and a time when the Financial Crisis was causing major problems throughout the British economy.
The proportion of lenders who fear that credit card defaults will increase in the next quarter of the year also reached a level not seen since 2009, according to what the Bank of England calls its credit conditions survey.
Lenders typically indicate that their customers are likely to default on their debts if they are more than 90 days behind on their payments or if they don’t expect that a specific debt will ever be paid in full.
For their part, consumers and borrowers are understood to be feeling added financial pressures as they go through this year thanks in no small part, in many cases, to falls in real wages which mean incomes are growing at a notably slower pace than prices are rising.
A steep decline in the value of the pound since it the 2016 Brexit referendum has helped to push up the costs associated with imported goods to the UK and left households, particularly those with limited financial flexibility, feeling the pinch.
In an increasing number of cases, that financial squeeze has led to credit card users and people with personal loans leaving their debts unpaid and overdue.
According to the Bank of England, lenders are responding to current trends by reducing the availability of credit and particularly forms of lending that are deemed to be relatively risky.
There are concerns that high levels of inflation might soon lead the Bank to introduce a rise in the base rate of interest, which could then lead to a further rise in the number of people defaulting on their debts throughout the country.
If you live anywhere in Scotland and you are struggling to manage your credit card or personal loan debts then Scotland Debt Solutions can help. You can contact us any time to arrange a free and confidential consultation.
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can […]
If you have credit card debt which is attracting a high level of interest, moving this balance onto a lower interest card could save you a considerable amount of money. This process is known as a ‘balance transfer’, and if done correctly, this process could save you money and also reduce the time it takes […]
Many thousands of young Brits are being actively encouraged towards taking on debt and spending borrowed money even before they reach their 18th birthdays. That’s according to the price comparison website comparethemarket.com, whose research suggests that roughly one in four 16 and 17 year olds in the UK have been offered credit cards or asked […]
If you’re in serious debt with no hope of repaying your unsecured creditors, you don’t have to wait for a creditor to take legal action against you. You may be able to take matters into your own hands and apply for sequestration (bankruptcy in Scotland). This also prevents your situation from worsening. There are two […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
Scotland has a number of formal debt solutions that can help you deal with a difficult financial situation. It’s advisable to take action as soon as possible, however, to prevent your levels of debt escalating when interest and other charges are added. Obtaining professional advice is key in this respect. An approved money advisor or […]