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Tactics of credit card lenders risk pushing people into debt problems, says Citizens Advice Waltham Forest

 

Citizens Advice Waltham Forest is warning that tactics used by credit card lenders are putting people at greater risk of long term debt problems.

This week Citizens Advice launches a major new report on long term debt, which finds that 1 in 5 people who are struggling to pay off their credit cards have had their credit limit raised without them requesting it – risking pushing them into further debt.

The Stuck in debt report also found that people with credit card debts were more likely to get into long term debt than those with personal loans and were less able to pay their debt down. Only 60% of people struggling with credit card debt were able to reduce it over two years, compared to 72% of people struggling with a personal loan – with credit card borrowers paying off £449 over two years, compared to a drop of £620 for people with personal loans.

In the 12 months to June 2017, Citizens Advice Waltham Forest helped clients with 391 credit card issues.

Citizens Advice Waltham Forest is urging people who are struggling to repay their debts to seek advice and avoid entering into a debt spiral.

Suna Panatiotou, CEO of Citizens Advice Waltham Forest said:

“Irresponsible lenders are pushing people further into the red.

“Research from national Citizens Advice’s shows that some credit card providers are extending people’s credit when they’re barely keeping on top of their minimum monthly repayments – which leaves them in a worse financial position.

“It’s really important that anyone who is struggling to pay off their credit card seeks help from us as soon as possible. We can help you to work out the best way manage your finances and how to make repaying your debt more manageable.”

The national charity is calling for changes to protect people from falling into long term credit card debt, including:

  • Firms to be banned from raising people’s credit limits without obtaining their explicit consent to give people more protection against ever increasing debt.
  • The Financial Conduct Authority to provide clear guidance to lenders stressing that before increasing a borrower’s limit, they must check their ability to repay it.

 

Citizens Advice Waltham Forest offers independent, confidential, impartial and free advice on debt problems. Telephone 0300 330 1175 (Monday-Friday 9am-5pm) or email advice@citizensadvicewalthamforest.org.uk.