Millions pay mortgage and rent with credit card
January 8, 2011
It has been revealed in a recent report that millions of people had to turn to their credit cards last year in order to keep on top of repayments on their mortgages or to make rental payments on their rented properties. Around 2.6 million struggling households are thought to have used money from a credit card in order to keep a roof over their heads and pay the rent or mortgage on their properties.
The data comes from Shelter, the housing charity, and the group said that the situation was unsustainable and that households were facing a daily struggle in order to make ends meet and make payments on their properties, whether it was rent or mortgage repayments. The data from Shelter showed that there had been a 2 percent increase in the number of people that had used a credit card to make payments on mortgages and rent last year compared to the previous two years, with 4 percent doing this in 2088 and 2009 but 6 percent doing it in 2010.
However, officials are concerned that not only does this indicate that people are still struggling enormously when it comes to paying for their home, but also that they will end up paying a fortune for borrowing on a credit card in order to pay off another debt.
Tags: cash, Economics, eviction, Mortgage, credit card, homelessnessOne finance industry official said: ‘Taking out cash on a credit card should be seen as a last resort. It is an expensive way to borrow. If you need cash, you could look at alternative forms of borrowing such as personal loans, which currently have cheaper rates than the majority of cash rates on credit cards.’
Shelter added: ‘This is a totally unsustainable situation. It is one we fear could see thousands more pushed into the spiral of debt, eviction or repossession and ultimately homelessness. Using credit cards to pay the rent or mortgage is simply robbing Peter to pay Paul. It is the worst possible course of action.’