Plastic in meltdown

BRITAIN has been taken over. Not by rats, roadworks or any of the other blights of modern life that are said to be so numerous as to be never more than six feet away from us. The invader in this instance is credit cards. Research published yesterday shows there are now 64 million in the UK ? more than one for every man, woman and child ? and we are spending greater amounts on them, despite failing to understand how much they cost us. It is a disturbing scenario with the potential to become a disaster.

The British love affair with plastic is laid bare by Mintel, the market analysts. Almost ?165bn was spent on the main branded credit cards across the EU last year, with Britons accounting for ?120bn of that. Greater home ownership is a significant factor. Rising house prices and low interest rates have made householders feel wealthy. For others, the prime example being students, borrowing has simply become a fact of life, a way to work the system in the absence of state or parental support. Credit cards can be useful, if deployed sensibly. But as another study for the OFT showed, fewer than half of those questioned paid off their credit card balance each month, 38% routinely allowed debts to "roll over" to the next month ? thereby incurring hefty interest charges ? and 13% sometimes did so. Some 21% had built up debts of more than ?1000 a month. When interest rates climb higher, these borrowers will find themselves sinking deeper into trouble.

What is to be done to save Britain's spenders from themselves? It is one thing to argue that consumers should be more responsible. Yet given the complexity of the arrangements ? an investigation by the Commons Treasury select committee found companies using 10 different ways of calculating annual percentage rate ? and the multitude of offers thrown at them, it is little wonder consumers are confused. The committee argued for the imposition of a single method of calculating APR, and a standardised summary box in all material (setting out APR, minimum charges, interest-free periods and credit limits). That was in December last year. In its response yesterday, the Department of Trade and Industry said changes to make credit card borrowing easier to understand would start coming into effect in October, and legislation to strengthen licensing of the industry would be brought forward as soon as parliamentary time allowed. In short, there appears to be precious little sense of urgency at work.

The balance of power and knowledge between borrowers and lenders is in urgent need of correction. One way of ensuring the same mistakes are not made by future generations is to make children more financially aware from an earlier age, perhaps by using more practical examples of real-life money decisions in their lessons. At the moment, too many of us are proving to be penny wise and pound foolish when it comes to credit cards. The parties who benefit most from that ignorance ? the lenders ? are the least likely to change their ways unbidden. Once he has today's budget out of the way the chancellor, Gordon Brown, should take careful stock of Britain's growing debt mountain. His fortunes, and those of millions of borrowers, may depend on it.

BRITAIN has been taken over. Not by rats, roadworks or any of the other blights of modern life that are said to be so numerous as to be never more than six feet away from us. The invader in this instance is credit cards. Research published yesterday shows there are now 64 million in the UK ? more than one for every man, woman and child ? and we are spending greater amounts on them, despite failing to understand how much they cost us. It is a disturbing scenario with the potential to become a disaster.
The British love affair with plastic is laid bare by Mintel, the market analysts. Almost ?165bn was spent on the main branded credit cards across the EU last year, with Britons accounting for ?120bn of that. Greater home ownership is a significant factor. Rising house prices and low interest rates have made householders feel wealthy. For others, the prime example being students, borrowing has simply become a fact of life, a way to work the system in the absence of state or parental support. Credit cards can be useful, if deployed sensibly. But as another study for the OFT showed, fewer than half of those questioned paid off their credit card balance each month, 38% routinely allowed debts to "roll over" to the next month ? thereby incurring hefty interest charges ? and 13% sometimes did so. Some 21% had built up debts of more than ?1000 a month. When interest rates climb higher, these borrowers will find themselves sinking deeper into trouble.

What is to be done to save Britain's spenders from themselves? It is one thing to argue that consumers should be more responsible. Yet given the complexity of the arrangements ? an investigation by the Commons Treasury select committee found companies using 10 different ways of calculating annual percentage rate ? and the multitude of offers thrown at them, it is little wonder consumers are confused. The committee argued for the imposition of a single method of calculating APR, and a standardised summary box in all material (setting out APR, minimum charges, interest-free periods and credit limits). That was in December last year. In its response yesterday, the Department of Trade and Industry said changes to make credit card borrowing easier to understand would start coming into effect in October, and legislation to strengthen licensing of the industry would be brought forward as soon as parliamentary time allowed. In short, there appears to be precious little sense of urgency at work.

The balance of power and knowledge between borrowers and lenders is in urgent need of correction. One way of ensuring the same mistakes are not made by future generations is to make children more financially aware from an earlier age, perhaps by using more practical examples of real-life money decisions in their lessons. At the moment, too many of us are proving to be penny wise and pound foolish when it comes to credit cards. The parties who benefit most from that ignorance ? the lenders ? are the least likely to change their ways unbidden. Once he has today's budget out of the way the chancellor, Gordon Brown, should take careful stock of Britain's growing debt mountain. His fortunes, and those of millions of borrowers, may depend on it.

BRITAIN has been taken over. Not by rats, roadworks or any of the other blights of modern life that are said to be so numerous as to be never more than six feet away from us. The invader in this instance is credit cards. Research published yesterday shows there are now 64 million in the UK ? more than one for every man, woman and child ? and we are spending greater amounts on them, despite failing to understand how much they cost us. It is a disturbing scenario with the potential to become a disaster.The British love affair with plastic is laid bare by Mintel, the market analysts. Almost ?165bn was spent on the main branded credit cards across the EU last year, with Britons accounting for ?120bn of that. Greater home ownership is a significant factor. Rising house prices and low interest rates have made householders feel wealthy. For others, the prime example being students, borrowing has simply become a fact of life, a way to work the system in the absence of state or parental support. Credit cards can be useful, if deployed sensibly. But as another study for the OFT showed, fewer than half of those questioned paid off their credit card balance each month, 38% routinely allowed debts to "roll over" to the next month ? thereby incurring hefty interest charges ? and 13% sometimes did so. Some 21% had built up debts of more than ?1000 a month. When interest rates climb higher, these borrowers will find themselves sinking deeper into trouble. What is to be done to save Britain's spenders from themselves? It is one thing to argue that consumers should be more responsible. Yet given the complexity of the arrangements ? an investigation by the Commons Treasury select committee found companies using 10 different ways of calculating annual percentage rate ? and the multitude of offers thrown at them, it is little wonder consumers are confused. The committee argued for the imposition of a single method of calculating APR, and a standardised summary box in all material (setting out APR, minimum charges, interest-free periods and credit limits). That was in December last year. In its response yesterday, the Department of Trade and Industry said changes to make credit card borrowing easier to understand would start coming into effect in October, and legislation to strengthen licensing of the industry would be brought forward as soon as parliamentary time allowed. In short, there appears to be precious little sense of urgency at work.The balance of power and knowledge between borrowers and lenders is in urgent need of correction. One way of ensuring the same mistakes are not made by future generations is to make children more financially aware from an earlier age, perhaps by using more practical examples of real-life money decisions in their lessons. At the moment, too many of us are proving to be penny wise and pound foolish when it comes to credit cards. The parties who benefit most from that ignorance ? the lenders ? are the least likely to change their ways unbidden. Once he has today's budget out of the way the chancellor, Gordon Brown, should take careful stock of Britain's growing debt mountain. His fortunes, and those of millions of borrowers, may depend on it.BRITAIN has been taken over. Not by rats, roadworks or any of the other blights of modern life that are said to be so numerous as to be never more than six feet away from us. The invader in this instance is credit cards. Research published yesterday shows there are now 64 million in the UK – more than one for every man, woman and child – and we are spending greater amounts on them, despite failing to understand how much they cost us. It is a disturbing scenario with the potential to become a disaster.The British love affair with plastic is laid bare by Mintel, the market analysts. Almost £165bn was spent on the main branded credit cards across the EU last year, with Britons accounting for £120bn of that. Greater home ownership is a significant factor. Rising house prices and low interest rates have made householders feel wealthy. For others, the prime example being students, borrowing has simply become a fact of life, a way to work the system in the absence of state or parental support. Credit cards can be useful, if deployed sensibly. But as another study for the OFT showed, fewer than half of those questioned paid off their credit card balance each month, 38% routinely allowed debts to "roll over" to the next month – thereby incurring hefty interest charges – and 13% sometimes did so. Some 21% had built up debts of more than £1000 a month. When interest rates climb higher, these borrowers will find themselves sinking deeper into trouble. What is to be done to save Britain's spenders from themselves? It is one thing to argue that consumers should be more responsible. Yet given the complexity of the arrangements – an investigation by the Commons Treasury select committee found companies using 10 different ways of calculating annual percentage rate – and the multitude of offers thrown at them, it is little wonder consumers are confused. The committee argued for the imposition of a single method of calculating APR, and a standardised summary box in all material (setting out APR, minimum charges, interest-free periods and credit limits). That was in December last year. In its response yesterday, the Department of Trade and Industry said changes to make credit card borrowing easier to understand would start coming into effect in October, and legislation to strengthen licensing of the industry would be brought forward as soon as parliamentary time allowed. In short, there appears to be precious little sense of urgency at work.The balance of power and knowledge between borrowers and lenders is in urgent need of correction. One way of ensuring the same mistakes are not made by future generations is to make children more financially aware from an earlier age, perhaps by using more practical examples of real-life money decisions in their lessons. At the moment, too many of us are proving to be penny wise and pound foolish when it comes to credit cards. The parties who benefit most from that ignorance – the lenders – are the least likely to change their ways unbidden. Once he has today's budget out of the way the chancellor, Gordon Brown, should take careful stock of Britain's growing debt mountain. His fortunes, and those of millions of borrowers, may depend on it.