Credit card restrictions could increase debt for consumers

Credit card restrictions could lead to consumers taking on more expensive debt, one financial expert has claimed.

Moneywise magazine has said that consumers could be more likely to use their overdraft facility if credit cards are restricted, which could incur bank charges which would be a more expensive short term debt.

Rachel Lacey, editor of the magazine, said that credit conditions are going to be tight for the rest of the year.

“I think whether you’re a new borrower seeking a fresh sort of credit, like a new loan or a credit card, it’s going to be hard,” she continued.

The magazine also said that stricter lending criteria could come as “a bit of a shock” to a consumer culture accustomed to the idea of ’spend now, pay later’.

According to findings from uSwitch, the price comparison and switching website, almost one in four UK adults are finding debts unmanageable.

Up to 9.5 million have maxed out on one form of credit in the last six months and 38 per cent have had a credit card application rejected.

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