Families face lifetime of debt

THOUSANDS of credit card users face a lifetime of debt because of 'reckless and irresponsible' lending, it has been claimed. Consumer groups said banks were encouraging people on low incomes to take out cards they cannot afford in a ruthless drive to increase profits.

As a result, ever-increasing numbers of families will be buried under Britain's £1 trillion debt mountain, with little or no prospect of ever clearing their debts.

The accusations came after it emerged that banks wrote off a record £6bn of bad debts last year - double the figure of five years ago.

Credit card debts alone account for £2bn, a staggering twenty-fold increase in ten years, which shows how much the credit culture has spiralled out of control.

Although banks describe the bad debts as 'written off', the phrase is misleading. Banks almost always pass them to debt recovery agencies who aggressively pursue people through the courts. The process can drag on for years, by which time interest charges have massively increased the size of the debt. Homes or other assets can then be seized.

Eddy Weatherill, chief executive of the independent watchdog the Banking Advisory Service, said: 'This is a sign of the severely irresponsible, reckless lending policies of many banks which are seeking to inflate their profits for short-term gains. They are interested in profit, not consumer wellbeing, so they lend money to people who can't afford to pay it back and face a lifetime of debt as a consequence.

'When you see the banks have written off £6bn it sounds as if they are shouldering the cost, but the truth is that consumers will pay. The human cost will be considerable in terms of suffering and who knows how many more suicides we will see because of that.'

Claire Whyley, deputy head of policy at the National Consumer Council, said: 'These worrying figures show that credit cards are rarely the right way for people on low incomes to borrow.'

Personal bankruptcies are now at record levels, with half of all bankrupts aged under 30. Most have been swamped by credit card debts, loans and excessive mortgages from lenders indifferent to their ability to pay.

Outstanding credit card and personal loan debt stands at £180bn - more than £3,000 for every man woman and child in the country. Britons have 64m credit cards, in sharp contrast to other European countries such as France, where a larger population has just 2.8m.

There have been a series of suicides blamed on the easy availability of credit card cash. One victim was production worker Stephen Lewis, 37, who hanged himself last July after running up £70,000 debts on 19 cards. The father of two, who earned £22,000, was facing court action. His widow Susan spoke out about his plight in a bid to shame credit card firms into acting responsibly.