Britons are collectively paying £9bn a year in interest on debts accumulated on their credit cards, new research has shown.
 
Britons owe billions of pounds in interest on their credit cards

According to high street bank Abbey, more than two-thirds of people have at least one credit card, with the average person owing £3,256 on their plastic.

The figures have revealed only 36% of credit card holders pay off their balance in full each month.

More than 40% of people asked admitted having credit card debts for at least a year, while 22% have had credit card debt for more than four years.

Men tend to owe slightly more on their plastic than women, having an average outstanding credit card balance of £3,627 compared with women’s £2,778.

But despite the four-figure debt that people have run up on their plastic, 55% of people have never moved their balance to a 0% interest deal, and only 9% plan to do so during the next few months.

Callum Gibson, head of credit cards at Abbey, said: “By transferring an outstanding credit card balance to a 0% deal, Britons could save an average of £443 a year, a huge cost saving in today’s difficult economic climate.”
 
Many banks are reducing credit limits

Meanwhile, research carried out by financial website MoneyExpert.com found that an estimated 2.7 million credit card holders have had their credit limit reduced during the past six months, with an average of £1,960 knocked off the amount they can spend on their card.

Sean Gardner, director of MoneyExpert.com, said: “Overstretched borrowers are seeing their credit lifelines withdrawn.

“With unemployment on the up card companies are looking to claw back debt quicker than ever before.”

He added: “It is not just those who have debt problems who are being targeted.

“There’s plenty of evidence that people with good credit records are being hit, often because they don’t use their card enough as far as lenders are concerned.”

The trend to reduce credit limits appears to have accelerated as 1.8 million people had their credit limit reduced during the same period a year ago, when the average reduction was around £1,600.

Research found that 40% of people had their credit limit reduced by up to £500, a quarter had reductions of up to £1,000 while 10% had suffered a reduction of more than £5,000.