Millions Face 30-Year Debt Level
One in 10 credit cardholders, the equivalent of about 3.5m people, pays back their debt by only the minimum repayment each month, according to price comparison website uSwitch.com.
The website said that on average credit card companies set minimum monthly repayments at 2.6% of the outstanding balance, with 35 card providers setting them at just 2%.
If someone with an average credit card debt of £1,812 repaid their balance at a rate of just 2% a month it would take them 29 years and two months to clear it and cost them £2,858 in interest, it said.
But if people increased their repayments to 3%, it would halve the time taken to repay their debt to just over 15 years and only cost them £1,257 in interest.
"In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325bn, consumers could now finish repaying their mortgage before their credit card.
"Despite the introduction of 'health warnings' on credit card statements, the implications of making the minimum repayment each month are still not clear enough," said Mike Naylor.
The group is calling on credit card firms to raise their monthly minimum repayments to at least 3%.
Source: sky.news.com
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