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Credit cards `being used to pay off debts`

27/10/2008

Consumers struggling with their personal finances in the UK are increasingly relying on credit card spending as a way of paying off other debts.

This is according to Elaine Moore, who said that people are utilising such sources of cash as other lending dries up.

Writing in the Financial Times, she said: "For households unable to cope with increasing monthly bills and denied access to new unsecured loans, credit cards have become the last source of funds available."

She added that the month-on-month increase in total credit card loans in August of £131 million "plugged the gap" opened by the £132 million reduction in money lent to consumers in new unsecured personal loans over the same month.

Ms Moore added that people were also increasingly using their credit cards to make cash withdrawals, making them subject to high rates of interest.

Meanwhile, insolvency practitioner Alan Tomlinson recently advised consumers struggling with debt to cut back on any unnecessary spending and seek professional advice from an industry practitioner, the BBC reported.

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