We’ve known for some time that people are struggling with rising bills, but we’ve also been made aware that despite this, people are still opting to spend unnecessarily on the plastic without completely accepting the consequences of this action, and what can happen when you spend what you can’t afford.
So, it really has come as no surprise to learn that there has been a rise in credit card defaults over the last 12 weeks.
According to recent financial research, there has been a significant rise in people failing to make credit card payments, in comparison to the first three months of the year.
Many experts are putting the news down to the ever-increasing pressure on household budgets due to rising bills, but we believe that despite this, there is still room for improvement when it comes to people spending on the credit card.
This week, for instance, there have been reports that despite people struggling to meet food and fuel bills, high street stores are still doing relatively well. The two scenarios shouldn’t really go hand in hand, but they are doing because we live in a culture whereby people just pay for items on the plastic and tend to think about repayment at a later date.
People need to take responsibility for their own actions. If they are struggling to put food on the table, but are still able to spend in high street stores, there is something wrong.
It had been suggested that the warm weather had helped people get back out on the high street and had encouraged the ‘feel good’ factor which made people start spending again. But, regardless of the weather, we still believe that people should have the self-discipline to not spend what they can’t afford to pay back.
People don’t understand the damage that they are doing to their financial future by defaulting on their card repayments. Even one slip-up could be costly when it comes to getting credit again.
Even credit card companies themselves are getting somewhat concerned about the amount of people spending above their means with the card companies and banks already looking into tightening credit card availability.
It doesn’t just stop at credit cards either. The research also highlighted that people are defaulting on mortgage payments and other essential bill payments each month. Never have people been so close to the financial edge. Banks are also looking at tightening who they give mortgages to. People with small deposits looking to get on the property ladder will be the hardest hit as they will be deemed the riskiest to lenders.
We talk about credit card defaults as a matter of fact because they are happening so often nowadays. But, it really is a serious matter and it is getting out of control. We can only offer people the same advice as we always do – don’t spend what you cannot afford to repay. We have lost track of how many times we have said things like this but it seems to fall on deaf ears. Maybe only bankruptcy will help people learn the error of their ways.
It sounds harsh but people just seem hell bent on splashing the cash without understanding or accepting the consequences. It needs to change.