Credit Cards Being Used To Pay Loans
New research has discovered that a growing number of individuals in the UK have recently used their credit card in order to make a repayment on their home owner loan or mortgage.
The research comes from the housing charity Shelter, who claim that somewhere in the region of two million individuals have paid their home owner loan, or their rent, by borrowing the money on their credit card.
Alarmingly, Shelter say that the number of people paying for their loan in this way has increased by around 50 per cent, in the last twelve months alone. In a consumer survey 6 per cent of those interviewed admitted to having used a credit card to make a repayment on their home owner loan or rent, which equates to around two million people across the country.
These figures clearly demonstrate just how much some people are struggling to stay on top of their home owner loans and mortgages and the lengths they are prepared to go to in order to avoid building up loan arrears.
This is, of course, extremely short sighted of borrowers. Whilst the average interest rate on a typical home owner loan is in the region of between 4 and 5 per cent, a typical credit card will charge at least 16 per cent, possibly even more, thereby adding to a person’s debt and making the situation worse.
Most individuals believe that using a credit card instead of missing a loan repayment will avoid them losing their home through loan arrears and repossession, but in severe debt cases, a court may award a charging order on an unsecured loan or other debt, which would place the borrower’s home at the same risk.
Campbell Robb of Shelter said “This research brings into sharp focus how keeping a roof over their head has become a daily struggle for millions across the country.”
