Large Amounts of People in the UK Struggle with Credit Card Debt

A large group of business professionals has stated that the number of people in the UK struggling with credit card debt has risen significantly in recent months. This should be a wakeup call for those who currently have large amounts of debt or for those who have seen their payments increase over the last several months. The Association of Business Recovery professionals, otherwise known as R3, have estimated that there are over 960,000 people in the United Kingdom who have serious debt problems. This number is quite large, and it is expected to increase in 2011.

R3 has stated that the current situation will not likely change since the affordable lines of credit which were easy to find three years ago have now dried up. Those who were caught in the spending spree has either been eaten up by debt or have been forced to default on loan payments and the like. During this time, many people sought out the cheap credit in order to finance personal purchases and other expenses. The interest rates were low at the time, and banks were happy to lend money. However, with the economic crisis, many clients lost their cheap credit and instead saw interest rates rise dramatically and other fees increase substantially.

The other problem with the boom years of cheap credit was that the lifestyle which could be afforded to those who previously could not have it was hard to part with. The idea of closing the revolving door of credit was hard to cope with, and many simply refused to accept the numbers connected with the interest rates and late fees. Instead, they continued to make minimum payments, but got eaten alive by APR costs. For others, missing a payment date resulted in there being huge late fees rung up. These fees were sometimes larger than the amount owed for that month.

For some, the credit card debt was kept in check, amounting to a hefty lump of expense that has to be paid off when times are better. However, for others, the debt from credit cards got far too large. Debt amounts reported by R3 in some cases were equivalent to the sum of several years of salaries for the people. In this case, the person had to declare bankruptcy. While this alleviated the debt problems, the financial future of the person was ruined. Those who must declare bankruptcy often cannot get back into the financial game, even having problems opening normal savings and check accounts.

R3 has issued some basic warning signs for people who start to sink into debt problems. Many people start using one credit card to pay off the balance of another credit card. Once someone has gotten to this level of debt, there is a crisis waiting to unfold. One should not get into this problem, and if he or she does, help should be sought immediately. Assistance can be gained from a large number of financial help groups set up in the UK and abroad.