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| BankruptcyNews |
Posted - 17 October 2007 : 10:17:06
1m using plastic to pay their mortgage
More than one million people use high-interest credit cards to cover their mortgage or rent payments, debt experts say.
Six per cent of householders have turned to plastic to pay for the roof over their heads during the past year, according to housing charity Shelter.
Young people struggling to stay on the property ladder are most likely to use the 'rob Peter to pay Paul tactics', despite risking long-term ruin.
Many credit card companies charge interest between 15% and 18% - up to three times higher than typical mortgage rates. 'Ordinary people are being forced to seek more risky and expensive ways to stave off the threat of eviction and repossession,' said Shelter chief executive Adam Sampson.
The alarming trend was revealed by a Shelter survey of nearly 2,000 people.
Nearly one in ten householders in some parts of the country was using their credit cards, it showed. The worst culprits were 18 to 24-year-olds, among whom the figure was 7.5%.
Mr Sampson said: 'The number of people hit by the credit crunch, interest rate hikes and unaffordable housing costs is rapidly rising.'
Debt experts blamed lenders for allowing customers to borrow too much money. Heather Keates, director of Community Money Advice, said: 'It's fine if you pay off the balance every month but I would suggest most people don't - they just pay off the minimum, so the debt starts to spiral.'
Malcolm Hurlston, chairman of the Consumer Credit Counselling Service, warned worse was to come, with the imminent end of fixed-rate mortgages suddenly adding hundreds of pounds more to housing costs.
Source: thisismoney.co.uk
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