Bad debts from credit cards increase

2 December 2009

The banking system could be facing a `credit card crisis` as figures from the Bank of England showed that the amount of bad credit card debt banks have actually written off has doubled, the Telegraph reports.

The figures, which suggest that Britons are `facing increasing difficulties keeping their finances under control`, show that bad debts from credit cards increased from £812m to £1.6bn in the third quarter of 2009.

Despite banks claiming that the outlook improved `marginally` in the third quarter, the rise took the total amount of debt written off by UK banks in that quarter to £4.3bn - an all-time high. In the first nine months of the year alone, banks have already written off more than they did in the whole of 2008.

The news comes after the International Monetary Fund (IMF) warned earlier this year of a potential `credit card crisis` across Europe as families default on their debts - anticipating that up to 7% of Europe`s £1.49tn consumer debt `could` be written off - with the UK seeing the worst of it.

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