Record low UK interest rates in 2016 have encouraged households to have the biggest credit binge since the financial crisis of 2006. Borrowing on personal loan credit cards grew 6% year on year. Following the Bank of England cut rates in August shoppers subsequently increased spending. using short-term borrowing to take advantage of the record low interest.
Now we’re at the end of 2016, borrowers are being warned to take sensible steps to avoid debit at a time when credit card fees have increased by as much as 7% resulting in shoppers paying up to £470 more on a typical £4000 balance over the course of a loan if they pay the minimum balance each month.
Financial comparison website Moneyfacts revealed there were at least 15 increases to credit card fees since January 2016. The UK Cards Association have blamed the increases on the EU cap from last December, on amounts the banks can charge retailers for a card transaction.
Credit card companies are waking up to the need to address concerns over debt. Barclaycard may set up an ‘off’ switch to encourage shoppers to protect themselves against spending sprees. The off switch could be used for certain times of the day or it could cap the spending on a single transaction or spending over a 24 hour period. Visa and Mastercard have confirmed they also have the technology to make it work.
Another measure to calculate and measure shoppers’ own spending levels is to use the prepaid credit cards, pre-loaded with funds. These are continuing to grow in popularity and are widely accepted with a variety of banks, websites and retailers. Whether disposable or re-loadable, mostly through Mastercard and Visa, these are to be applauded for encouraging responsible spending.
At Fidelity Payment we pride ourselves on our transparent, honest reputation with no hidden charges or fees. We provide cost-effective payment processing solutions for all mainstream industry sectors, with clients ranging from retailers to insurance providers. Call us on 0345 481 2178.