No future for credit cards?

A report discussed prospects of reductions in credit products available, and increases to interest rates, fees and charges for credit services.

There has been a significant reduction in the availability of credit since the economic downturn, including credit cards, plus secured and unsecured loans. The British Banker´s Association also released figures showing the balance of credit card borrowing has fallen by 3% over the past year to £64 billion, and the number of credit cards issued to consumers has declined by 8%, which is a big drop.

The number of credit cards in circulation has dropped during the recession, but the report did show an increase in the average debt per card, with an average increase of 5%.
Several changes are due to come into effect in 2010 across the credit industry, when the Consumer Credit Directive is fully implemented, and this includes tighter regulations and more pressure on the lenders to provide clear and concise explanations about their charges and services to consumers. New regulations aim to help the borrowers, but it is also predicted that the cost of credit could increase.

Monthly or annual fees could become standard across the credit industry, from paying for access to a credit card to increased charges for premium benefits.
This could result in some consumers facing options which could see them looking for other avenues of credit, including personal loans. Unsecured loans, overall has dropped by 39%, and secured lending has fallen by 79% since the economic crisis began. Unless lenders increase the availability of credit as demand grows, it could be difficult for the consumer to receive credit, plus result in higher costs.

Reports have also shown that consumers are much less confident in their ability to handle personal debt and survey results showed that only 32% of 2,000 UK citizens questioned admitted to being able to make repayments on all the outstanding credit they have.
This was in stark contrast to the results of last year´s survey, which found 56% of people surveyed agreeing they would be able to make payments regularly on their debts.

When the Insolvency Service released statistics from the third quarter of 2009, they showed a substantial growth of 28.2% in personal insolvencies, which showed that despite some recovery in the economy, the level of personal insolvencies in the UK could still continue to increase in 2010.

A world without credit cards would be strange, but considering the amount of debt people have got themselves into with their little plastic ´friends´ it could just work out for the best!