According to a recent poll by housing charity Shelter, its estimated that over 1 million borrowers in the United Kingdom are exchanging mortgage debt for plastic. Survey results published yesterday revealed 6% of respondents liable for rent or mortgage said they paid by credit card at some point in the last 12 months. This percentage if applied nationally it would mean over 1 Million households did this.
This is a shocking discovery and another statistic that shows the toll the recent credit crisis has taken on the consumers. The situation is worse in larger cities especially London where one in twelve are paying their mortgage or rent payments with a credit card. While it is known or expected that the working class is suffering the most with 8% of working class professionals testifying to the practice, even the middle and upper-class households are falling victim with 4% of these respondents testifying to the practice.
It is indeed a sorry state of affairs where people are struggling to the extent they fear losing their home and are increasing their credit card debt. This is an extremely dangerous policy for two reasons:
1) Credit Card debt is usually significantly more expensive with typical APR rates almost 3 times the mortgage typical APR rates. This means this debt grows at a significantly faster pace and can lead to bankruptcy.
2) Credit Card companies are not subject to the same rules as mortgage lenders and can more easily get a possession order from court and force a property sale in order to recover credit card debt.
We urge our readers to not fall into this trap and seek immediate help if they are contemplating using credit cards to pay mortgage or rent. Please call Shelter's free helpline on 0808 800 4444 if you're struggling to pay rent and on 0300 3300 515 if you're struggling to pay your mortgage.
