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.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]