24% struggling to meet credit card payments

11 December 2014

One in five (19%) credit card customers made only the minimum payment in October, while 5% made no payment at all, new research has found.

The Debt Advisory Centre (DAC) said that the "concerning" figures were worrying as its research was carried out before the traditionally expensive Christmas period when people are more likely to spend on their credit card.

It found that 18- to 24-year-olds struggled the most to pay their credit card bills, with 26% only managing to meet the minimum payment in October and 13% admitting they missed it completely, leaving them paying more in interest and in charges.

A customer paying the minimum payment off a £2,500 balance on a typical credit card with an APR of 18.9% will take more than 25 years to clear the debt, the AOC said, and pay more than £3,000 in interest too.

Customers that fail to make the minimum payment will usually be charged a penalty - typically £12 – and any missed payments will also show up on the customer's credit history, potentially making it more difficult for them to obtain credit in the future.

However, the DAC also found that 49% of cardholders did pay off their balance in full each month, while 19% said they paid off more than the minimum payment but less than the full balance.

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Ian Williams, spokesman for DAC, said: "It's concerning to see how many people were struggling to pay their credit card bill – even in October before the bulk of Christmas shopping costs hit. Many people will be unaware that just paying the minimum payment on their credit card each month could see them paying off their debts for many years to come.

"For those who are struggling to make the minimum payment each month, or who have already missed one or more payments, it is important to contact your lender or seek debt advice as soon as possible. The longer you leave it before asking for help, the more interest and charges can pile up."

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