Barclaycard is expected to announce that it is turning away more than half of people who apply for a credit card, over fears that they may have debt problems and would have difficulty repaying their balance.
As its parent company prepares to release their first half results, the credit card provider is widely tipped to announce that half of applicants are being refused cards as recession and debt management fears are stoked.
Over the last two months the credit card provider has warned around 11,000 cardholders, that they could be in financial difficulty, and the provider has admitted they may have to increase interest rates to reflect the risk associated with extending customer’s credit.
Antony Jenkins, chief executive of Barclaycard, said the company was moving more quickly to identify when customers had debt problems.
Rather than just becoming concerned when a customer was struggling to pay, they were now: “starting to look at when they used to pay us off in full and were now making only a minimum payment or their spending on the card is rising”.
Debt advice organisations suggest customers deal with their debt problems before they get out of hand and ask people with loans and credit card debts to watch out for tell-tale signs that debt problems may be starting to develop.
Ivan Cooper, Chairman at debt management specialists Chiltern said: “Signs that debt problems may be developing include using credit card debt to pay for fuel or food, going further into the red each month, or simply struggling to maintain all of your commitments.
“Quite often, we hear of people who juggle their finances and ‘rob Peter to pay Paul’. This just means that they use one credit card to pay for another, or use an overdraft or loan to repay other store card or credit card debts.”
Debt help firms can provide budgeting and debt advice to assist customers struggling with their unsecured balances (overdrafts, personal loans, store card and credit card debts etc) to become debt free.
Where necessary, debt advice organisations can also suggest a number of professional debt help solutions to help consumers regain control of their finances.
Professional solutions include Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) and Trust Deeds.
