Two million people permanently in red

July 20, 2007

More than two million people are permanently overdrawn, and the average worker goes into the red 27 days after payday, a survey shows.

Almost half of working Britons — more than 10 million people — have slipped into the red at least once in the past 12 months, including 2.1 million people who are continually overdrawn, according to price comparison site Moneysupermarket.com.

Those who are unable to stay in the black go overdrawn on the 20th of the month, on average — 27 days after payday, as most people are paid on the 24th day of the month.

Kevin Mountford, head of current accounts at Moneysupermarket.com, said the findings were not surprising, particularly as the Bank of England has hiked the base rate five times in the past year.

“Consumers are no doubt feeling the squeeze,” he said.

Two million people permanently in red | UK | Reuters

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Millions Face 30-Year Debt Level

July 19, 2007

Millions of people may be in debt for up to 30 years if they make only the minimum repayments on their credit cards each month.

One in 10 credit cardholders, the equivalent of about 3.5m people, pays back their debt by only the minimum repayment each month, according to price comparison website uSwitch.com.

The website said that on average credit card companies set minimum monthly repayments at 2.6% of the outstanding balance, with 35 card providers setting them at just 2%.

If someone with an average credit card debt of £1,812 repaid their balance at a rate of just 2% a month it would take them 29 years and two months to clear it and cost them £2,858 in interest, it said.

But if people increased their repayments to 3%, it would halve the time taken to repay their debt to just over 15 years and only cost them £1,257 in interest.

In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325bn, consumers could now finish repaying their mortgage before their credit card.

Millions Face 30-Year Debt Level |Sky News|Business


Card holders charged for being in credit

March 5, 2007

MBNA has started fining customers who have positive balances on their credit card accounts.

Swingeing rates of interest. Annual fees. Hidden charges. For years credit card companies have charged their customers for borrowing money. Now one card provider has started punishing its cardholders for being in credit.

MBNA, the American credit card giant, has written to thousands of people in the past few weeks who have inadvertently paid the company too much money.

Card holders charged for being in credit | Personal Finance | Money | Telegraph