The number of cases in which
credit card debt is being written off has significantly increased, new figures have shown.
According to the
Bank of England, banks and other financial institutions wrote off some £1.25 billion in the first three months of 2010 – the second highest quarterly amount ever recorded.
The recession and rising unemployment have meant many households are unable to meet their card payments.
However, the losses incurred on such write offs are a major factor in pushing up interest rates on
credit card deals.
Recent figures indicate that the average UK
credit card rate was 16.51 per cent in April this year, up from 15.2 per cent in July 2007.
The findings coincide with a ComRes survey for insolvency practitioners group R3 which suggests that Britain is facing an insolvency crisis due to rising debt.
Steven Law, president of R3, said there are now almost a million people in the UK struggling to meet their repayments.
"While it may be the case that these problems are resolved without help, there is a risk that they might snowball out of control," he said.
