New figures released from credit card company BarclayCard have revealed that an increasing number of people are having difficulty paying off their credit card debt.
While the default rate of credit cards slowed in the second half of 2009, the figures released by the UK’s largest credit card company showed that the company’s bad debts rose by two-thirds on the levels from 2008 to £1.8 billion. The bad debt that BarclayCard has written off climbed 64 per cent from 2008.
The increase in bad debt has led to the bank using the figures to justify increasing credit card interest rates to their highest level in 12 years. The economic downturn has meant that many more people are at risk of defaulting on their payments due to increasing unemployment levels. This is reflected by an increase in the number of personal insolvencies which reached a record high in 2009 of 134,142. This figure is an increase of 27,000 from the previous high in 2006. This news comes after a report from Santander Cards that an estimated 4.5 million Britons were planning to transfer in excess of £3.2 billion pounds between credit cards in the first three months of 2010
Barclaycard has 10.4million UK card customers and 10.8million in the rest of the world. These credit card customers have outstanding credit card balances totalling £20.5billion.
Overall, pre-tax profits at Barclaycard fell by 4 per cent to £761million, as the losses on bad debts offset increased lending levels and improved margins.
