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The majority of people in the UK say they have either a credit card and / or an overdraft, and some of these have very generous credit limits. However, borrowing recklessly could lead to problem debt.
The majority of people in the UK have some form of instant credit available to them, and while they don’t have to spend it, the limits they might have access to could be very tempting.
Paying on plastic
New research* carried out for us has found that two-thirds of people have a credit card. Of these, a third say they have a limit of over £5k that they can spend, while more than one in 7 have access to over £10k.
Credit cards are not the only form of unsecured credit being used by the majority of UK adults though. Nearly the same number have an overdraft … with a third of these saying they have access to more than £1,000. While an overdraft should really be seen as a safety net for that odd day when you don’t have enough money in your account to cover a direct debit, there may be some who view it as an extra source of spending money.
Too much temptation?
Of course, you don’t have to spend all of the credit that’s available to you … but it might be tempting.
However, whether you’re thinking of spending £5 of your overdraft or £5,000 of your credit card limit, you must be as sure as you can be that you’ll be able to pay the money back again. While it may be tempting to borrow when the money is at your disposal and you wouldn’t otherwise have the cash to splash, if you can’t afford to repay it you could end up in a difficult situation.
Living beyond your means
The maximum limit on your credit card is the maximum sum a lender is willing for you to borrow based on your unique circumstances … but that doesn’t mean they are encouraging or suggesting you actually spend up to that limit. Instead, you should carefully consider whether you will be able to repay it without incurring too high an interest charge.
If you keep on borrowing on your credit card, or getting closer to the bottom of your authorised overdraft, you may find it takes you longer to repay everything. This could leave you open to charges if you’re unable to pay back what you’ve borrowed.
However, if you find that your borrowing has spiralled out of control and you’re now struggling to repay what you owe, it’s important you take action rather than bury your head in the sand. Ignoring the situation could make it worse, and there are sources of help and advice available to you.
*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 24Th July and 31st July 2014, of whom 620 were Scottish residents.
by Christine WalshBack to blog home