Large credit card limits could be too tempting for some Brits

Tuesday, 11/11/2014

The majority of British adults are open to the temptation of debt due to them having access to large credit card limits and overdrafts, a new study has found.

Research conducted by the Debt Advisory Centre found that 66% of people have at least one credit card, with more than a third of them being able to spend over £5,000 if needed. Some 14% (the equivalent of 5.8 million people) are able to borrow sums of £10,000 or more.

The charity has dubbed this situation 'Temptation Britain' as it could lead to families taking on debt that they cannot really afford, especially in the run up to Christmas.

In addition to available credit on cards, almost two in three people (62%) have an authorised overdraft to dip into. For a third of those questioned a limit of £1,000 is in place, but more than 250,000 nationwide have in excess of £10,000 available to them.

Debt Advisory Centre spokesman, Ian Williams, said the amount of borrowing available to consumers is "surprising". He added that the sums are "incredibly tempting" and leave some borrowers "at risk of getting into trouble".

While such borrowings are typically unsecured, a failure to meet repayments can lead to court judgements being made and access to future borrowings being restricted due to an impaired credit rating.

A study conducted by Unison earlier this year revealed that many low-paid workers in the public sector take 11 months or more to clear debts that they have run up during the Christmas period.

The union believes that pay freezes imposed by the government have left a substantial proportion of public sector workers struggling with household bills and using payday loans and credit cards has swiftly become their only option for funding the expensive festive period. Some 41% of respondents said they take on debts each December and 67% admitted to cutting back spending on food and drink.

Dave Prentis, Unison's general secretary, said rising household bills, the cost of childcare and transport expenses mean some families are "only one bill away" from debt.

If you need to borrow this Christmas, it pays to shop around and find the deal that best suits your requirements and personal circumstances.

Payday loans are not suitable for, and would be expensive as, a means of longer term borrowing and are not appropriate if you are in financial difficulty.

Representative 1269.7% APR

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk