Credit card defaults jump.

23rd April 2019.

Figures from the Bank of England show the number of people defaulting on their credit card debts rose sharply in the first three months of the year.

The Bank’s survey of major lenders found the default rate had increased to 22.9% in the first quarter from 12.7% in the last quarter of 2018.

The last time the credit card default rate rose above 20% was in the second quarter of 2017, when it hit 25.4%.

Anti-poverty groups say that the recent rise in defaults shows that increasing numbers of low-income households are getting into serious financial difficulties with sharp increases also seen in council tax arrears.

The Bank of England reported that the trend for lenders to cut back on unsecured lending was likely to continue over the next three months.

It is expected there will be a tightening of credit card debt by lenders to bring down the default rate over the next three months. However, it must be noted that the same was expected this time last year and yet the trend did not reverse.

Jeremy Thomson-Cook, chief economist at the currency broker WorldFirst, said the rise in defaults “could threaten the brighter-than-expected retail picture”.

Peter Briffett, the chief executive of payments firm Wagestream, said “A surge in defaults on credit card borrowing shows that rising wages in the UK mask the financial stress that is still a reality for many, this is a big red flag for household finances. The credit card balance default rate hasn’t been higher since the first half of 2017 and marks a return to rocky ground, far outpacing the deterioration seen with other forms of unsecured lending.”

Do you sell to consumers?

If you sell to consumers then you will be concerned about the rise in credit card debt as it shows stress in the consumer market.

CPA can help you recover payments from consumers who owe you money.

About CPA

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class commercial credit information that can help you avoid being over extended to commercial customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your commercial customers.

We regularly publish lists of the latest company insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

Companies in trouble usually have very bad bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.

Help us help you identify the risks of selling on credit to commercial entities.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

Our recovery service is equally effective whether your customer is another business or a consumer. We can help you get your invoices paid!

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0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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