Personal loan debt being transferred to credit cards

Tue, 08 Dec 2009

Consumers in the UK may be paying off their personal loans but are increasing debt owed on credit cards, according to new research.

The Bank of England revealed that credit card debt rose by £134 million month-on-month in October, while there was a record drop in other forms of arrears .

Finance website Citywire commented on the figures, claiming that they could show a trend for moving personal loan debt onto a credit card, which it warned will just increase the amount owed.

"Personal loans and some car loans tend to be relatively cheap with the best at under ten per cent. Replacing a personal loan at, say, eight per cent with credit card borrowing at an average rate of 18 per cent makes no sense," the site explained.

Recent research from Confused.com showed that one-in-five credit card and personal loan accounts in the UK are being closed because repayments are not kept up.
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