1 June 2007
Figures from the Bank of England (BoE) have revealed that the UK's largest lenders have been forced to write-off £3.1 billion worth of debt after consumers rung up bills on their credit cards they were unable to pay off.
Bad debts rocketed by 44% last year after Britons borrowed an enormous £1.3 trillion, but the good news is that consumers are now becoming better at handling their finances.
While the £3.1 billion write-off is believed to be the biggest loss sustained since credit card records were introduced 15 years ago, research from the BoE has shown that lending figures for 2007 are slowly dropping as consumers attempt to sort out their finances.
Families are now borrowing the lowest amount on credit cards and overdrafts for a decade - just £498 million - as a direct result of their spiralling debts and the four interest rate rises since last August.The bad news for borrowers is that their reining in of splashing on plastic may not be enough to prevent a further rate rise. Speaking to the Daily Mirror, RBC Capital Markets economist Richard McGuire warned: "We suspect that the BoE will continue to raise rates until it sees some form of discernible weakness in the housing market."
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