Debt ''would increase by nearly Â£200bn if people maxed out credit cards''

By MoneyhighStreet Staff. Published on July 9, 2008 This post currently has no comments.

New research has shown that debt in the UK could soar if people opted to spend up to their borrowing limits on their credit cards.

Website moneysupermarket.com has calculated that the average credit card customer has a limit of £8,234.

This means that credit card debt would increase by £198 billion if everyone spent the maximum they are allowed to. The website explained that this was more than the government spends a year on health and education put together.

According to the site, 28 per cent of the adult population do not have credit cards. However, it added that around four million people have limits that would allow them to borrow up to £20,000.

"It''s all well and good to give someone a £5,000 credit limit if they can afford it, but huge potential problems occur when that one person is given cards by many different providers each with a £5,000 limit," explained Steve Willey, head of credit cards at the website.

"Some providers are acting responsibly by refusing applications due to a person''s total credit limit on all their cards, but others are still assessing things as though that person doesn''t have another card."

Recently, uSwitch.com reported that the vast majority of consumers were not being asked to prove their income when applying for a credit card.