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"Increase in credit card write offs by banks"

By Reno | June 25th, 2010 | General

According to a recent report there has been an increase in the number of credit card related write offs by UK banks and other UK financial institutions. Figures have been released by the Bank of England, showing that in the first three months of the year the level of credit card write offs by banks in the UK reached £1.25 billion.

The figure is said to be the second highest quarterly figure on record according to reports. Last year saw over £4 billion being written off on credit cards, and this equated to over 10 percent of all the money that was lent on credit cards. The Bank of England has said that the level of losses on credit cards has resulted in the interest rates on this type of borrowing increasing.

Over recent months there has been a lot of controversy over the rate of interest that credit card companies are often charging on credit card borrowing, but the Bank of England has said that this is partly down to the level of losses that credit card providers have experienced. Credit card interest rates are said to have soared over recent years, and whilst the base rate is at an all time low of just 0.5 percent credit card interest rates are spiralling out of control, especially on credit cards that cater for those with poor credit, where interest rates sometimes exceed 50 percent APR.

One credit card customer said: “Although having a credit card is really convenient and easy I can’t bring myself to use mine because of the rate of interest being charged. I can understand that lenders are nervous about the risk of default, but this means that those of us that would normally repay faithfully are having to think twice about using their cards.”

Tags: Credit Cards, interest rates, finance, Credit Cards, Bank of england

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