Fall in credit card use in 2010
Many people have been using credit cards on a regular basis for many years, as these cards are able to offer huge amounts of convenience, ease, and flexibility. Many people use these cards on a daily basis to save them carrying and cash and so that they can spread repayments on their purchases. However, one problem that has come from the popularity of credit cards is the number of people that have found themselves in huge levels of credit card debt, which has made life very difficult for them.
With the financial climate having been more difficult than many people have ever experienced over the past couple of years, many people have come to a point where they have had to take action to try and reduce their debt levels and avoid getting into any more debt. Despite the popularity of credit cards, research has shown that a rising number of people have been trying to avoid further debt by cutting back on credit card use.
Research was carried out by the British Retail Consortium showing that credit card use fell by nearly 13 percent last year, as consumers turned to cash and debit cards in order to try and avoid getting into further debt, and debit card use over the same period increased by 15.8 percent. The BRC said that more and more people were focussing on reducing their debt and avoiding increased debt by cutting back on credit card use. The consortium said that cardholders wanted to stop spending money that they hadn’t really got.
An official from the BRC said: “Hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got. At the same time, use of credit cards has dropped sharply. Cash remains king – used for more than half of all retail payments. “
How consumers can rid themselves of high interest credit card debt
Credit cards have been known for their extortionate rates of interest for many years, and this has become more and more noticeable because of the huge gap between the base interest rate and the average credit card interest rate. Whilst the base rate has been at a record low of just 0.5 percent for well over two years credit card rates have been soaring, taking the average rate to over 18 percent.
One recent report has suggested that some people may be better off paying off their high interest credit cards with the use of a lower interest loan. By doing this consumers will know exactly how much they are paying each month and for how long. They will also know how much interest they will be paying for the loan. With credit cards consumers could be repaying the debt for decades if they only make small repayments and could end up paying a fortune in interest.
This comes after another recent report revealed that around one third of people in the UK have admitted that their personal debt levels have increased over the past year.
One industry expert stated: “There is no need for consumers to bury their heads in the sand when it comes to their finances and by taking steps to reduce personal debt, many of these problems can be nipped in the bud early on, before they escalate out of control. Trimming down household budgets and ensuring they are paying as little as possible for all their financial products can really help to free up some cash to pay down debt, and should be the first port of call for anyone who is struggling. If you are in the fortunate position where you are able to consolidate your debt, an interest free credit card would always be a good solution. Alternatively, a personal loan could be an option if you want fixed repayments and pay down your debt over a set period of time. For those in more serious trouble, I would advise seeking help from one of the free debt advice charities who can help.”
Barclay’s to settle PPI claims
Many people that were charged Payment Protection Insurance on credit cards and loans by Barclays have filed for compensation over recent months, claiming that the insurance cover was mis-sold to them. However, due to the judicial review that took place recently many of these claims were put on hold leaving the customers waiting to find out whether they had been successful.
Whilst the rest of the banking industry is still seething from losing the legal challenge over PPI compensation one major High Street banking giant has decided to get the ball rolling by settling all claims that were filed prior to April 20th this year. Barclay’s said that it is now offering these customers a no-quibble settlement of their full premium along with an additional 8 percent by way of interest.
Many customers will be delighted to hear the news, having already waited some time for their claims to be looked into. Claims that come in now or came in after April 20th will not be automatically settled and decisions will be made on a case by case basis.
Barclay’s, along with other banking giants, had been given extra time to settle the claims for PPI because of the huge backlog that had been created as a result of the judicial review.
The Financial Services Authority had stated: “Some firms are facing a huge backlog and now a surge of new complaints, which has created a bottleneck. It is not in the interests of consumers to receive further poor handling of their complaints as a result.”
Barclay’s stated: “Barclays made a commitment to process all on-hold PPI complaints as soon as practicable. We have said before that when we get things wrong, we apologize, and work hard and work fast to put them right as quickly as possible.”