Recession Watch : Credit cards
The credit card industry has surprisingly escaped relatively unscathed from the constant criticism by the UK authorities of the UK financial sector. Even this week we have seen confirmation of credit card rate rises at a time when UK consumers are cutting back credit card spending and attempting to pay back their outstanding balances. There would appear to be little competition in the sector at this moment in time with credit card companies looking to protect their capital, their profits and ultimately the long-term future of their businesses.
In tandem with the UK mortgage market, the turning point for the credit card sector will come when one of the majors makes a move to become vastly more competitive than others in the sector. Much as HSBC has done in the two-year fixed-rate mortgage market we await news of a peak in credit card rates although when this may happen is very much debatable. Credit card debt could be a significant problem for UK consumers for a long time to come, even after definitive signs that the UK recession has ended and the economy is headed higher.
Whether UK credit card holders have learnt their lesson about overspending and over extending their finances remains to be seen but credit card debt will continue to remain at record highs for the foreseeable future.
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