PwC expects hike in bad credit card debts
A study called “Precious Plastic” by accountancy firm PricewaterhouseCoopers (PwC) has found that while there has been a “cooling passion” for credit cards, bad credit card debts could jump as much as 9% of all outstanding balances by the end of 2010.
According to Richard Thompson, a partner at PwC, over the last year, “there has been a cooling passion for plastic” with borrowing down 3% to £64 billion, while the number of cards in circulation had fallen by 8%.
However, despite this bad debts in the sector have reached all time highs, according to the firm, with the figure currently standing at about 6%.
Furthermore, while consumers in the UK are borrowing less than their European counterparts, debt levels in the UK remain high compared to the rest of Europe.
As bad debts increase, PwC said credit card holders should prepare themselves for interest rate rises and the introduction of annual fees.
The firm concludes: “At the higher end of the market customers will pay for access to premium benefits and at the lower end more marginal customers will be expected to pay for even a standard credit card.”
Britons collectively owe £230 billion through credit cards, loans and overdrafts.