Credit card crunch as customers miss payments

More than five million people have missed monthly payments on credit cards in the past six months, new MoneyExpert.com research shows. And that is a two per cent increase on the previous six months.

Research for the independent financial comparison website shows 11 per cent of credit card customers missed a monthly payment in the six months to December 21st 2007 compared with nine per cent in the six months to June 4th 2007 as the credit crunch hit home.

The numbers missing a payment, for whatever reason, rose by around 920,000 in the six months to 5,093,044 from 4,167,306, MoneyExpert.com research shows.

And it means a massive payday for credit card firms from late payment fees - they charge £12 a time for missed payments. In the six months to December 21 they are estimated to have made around £61 million compared with £50 million in the six months to June 2007.

MoneyExpert.com is urging card customers who are struggling with debts to take action now or risk further penalty fees and, ultimately, damage to their credit rating.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Debt worries have shot up the agenda as people start to count the cost of the UK’s borrowing spree over the past few years.

“With even the Church of England offering debt advice from the pulpit under its ‘Matter of life and debt’ campaign it’s clear that many people are living on a prayer and hoping for interest rate cuts to get them out of trouble.

“Missing a credit card payment comes at a financial cost of £12 a time but there are other factors to consider. The effect of a payment can last as long as three years on your credit file and it will be used by firms to decide whether they’re going to lend you cash and what they’re going to charge.

“As lending criteria gets tougher that will cost you. Anyone in trouble needs to take action now because the situation will only get worse if they bury their heads in the sand. They need to get their debts under control and cut their spending.”

People aged 25 to 44 are the most likely to have missed credit card bills – around 15 per cent have missed payments in the past six months.

Around 15 per cent of people in London have missed card payments while just nine per cent of those in the North of England have done so.