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Credit cards have been associated with many problems and pitfalls since their creation in the late 1950’s. The market is well-established and hugely important for UK consumers, who hold around 70% of all credit cards in Europe. Britons have the privilege of being able to buy practically whatever they want but, naturally, this comes with a greater risk.

Research in 2015 by the Financial Conduct Authority showed that many consumers tried to resist the lure of credit cards “but were eventually worn down by continual marketing”, especially when companies sent them targeted mailings pre-approving them for cards.

There has been some revealing data produced by several charities, one of which is Step Change, who showed that too many people are using credit as a safety net.

As a consequence, many people are struggling with multiple debts, high monthly payments and interest rates, coupled with inaccessible support that should be a standard part of customer care.

Lenders generally set minimum monthly payments so low they barely cover the amount of interest charged on the debt - typically about 3% of the total balance. In practice, this means that repaying the minimum balance on a £2,000 credit card at an interest rate of 17% takes 32 long years to pay back.

Moreover, the Hardship Programme offered by credit card companies, supposedly to provide help to those with trouble paying their balance, is often difficult to both access or use and is recorded on a customer’s credit score. These concealed programmes demonstrate that not only are there surface level difficulties with credit in application and identity but also once a card is acquired. Hidden numbers and the constant struggle to gain customer support from credit providers mean that many customers feel that help is out of reach.

The FCA have said that three million Britons do not pay off debts, as figures show consumer credit rose by 8.3% in the year to November 2015, with borrowing on credit cards up by £411m. And with British families projected to spend a combined £40 billion more than they earn in 2016, there are fears that economic growth fuelled by the rise of debt could collapse.

The young are also hit hard, with over a fifth more young people now seeking debt help compared to the previous year, demonstrating that credit is not a concern merely for one demographic.

Time Magazine offered a contrasting view, suggesting that the real problem is with the Cardholders. It is human nature to be attracted to offers, and many economists have shown that, unfortunately, people are bad at understanding the costs that come later on. Instead, humans assign a disproportionate amount of importance to the immediate, such as low initial rates and offers.

Credit card companies, it would appear, are all too aware of this. And, wherever the responsibility ultimately lies, there is little doubt that the proportion of debt in Britain attributable to credit cards is continuing to increase alarmingly.

Richard Dunnett - Pockit Team -http://cdn.pockit.com/images/RichardD_Headshot.png