30 November 2006
Consumers spending beyond their means has led to Barclaycard having no choice but to write off £1.5 billion worth of customers' debt.
The news arrives as Barclaycard announces a healthy £7 billion profit thanks to the success of all its other divisions.
Barclaycard's 11.2 million customers are predicted to default on debt averaging £140 each after the previous warning of a 37% rise in Barclaycard bad debts in the first half of the year were ignored and continued into the second six months.
The credit card firm insists that it has toughened up its criteria in response to the rising debt problems, stating that current statistics show that it rejects 57% of card applicants and that its policy to enforce higher interest rates for consistent late-payers has put people off over-spending.
Citizens Advice commented on the results by stating that it wasn't surprised by the news and that it again highlighted the debt crisis suffered by British consumers. It also confirmed that one in five of its visitors wanted help in managing their debt.
"Lenders should always make sure that people are able to repay the money before they agree to loans. At the same time, people should be wary of borrowing more than they can realistically afford," a spokeswoman for Citizens Advice told the Times.
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