UK braces for record card defaults

By Julie Sherrier

UK credit card defaultsThe UK is bracing for an unprecedented number of credit cardholders defaulting on their balances, reports the Financial Times.

According to ratings agency Moody's, credit card indices are showing that charge-off rates have increased from 6.4 per cent in May 2008 to 9.37 per cent in May 2009. That is almost matching the record high 9.5 per cent rate of defaults in the United States.

UK consumers continue to barrage the National Debtline of the UK with worrisome calls about meeting their debt obligations. In May 2009, the organisation reported 41,000 calls, which is double the amount from a year ago. UK residents have the highest rate of credit card borrowing on the continent.

Predictions from analysts are that as the unemployment rate continues to rise in the United Kingdom, personal insolvencies will rise in tandem.

Published: 29 July 2009