Warning Over Problematic Credit Card Debt

Around 1.4 million people are only making the minimum repayment on their credit cards each month, according the Financial Conduct Authority (FCA).

The city regulator says the trend has continued for the past three years, and there is concern surrounding the potential for problematic debt.

This can be an expensive way to borrow money over a long period as credit cards are suited to short term borrowing.

The FCA's report said there is little incentive for credit card companies to intervene and help customers get out of persistent credit card debt, as consumers who only make minimum repayments are "profitable."

"Firms could do more to help those with persistently high credit card debt to reduce debt burdens before they become problematic," the FCA said.

Christopher Woolard, director of strategy and competition at the FCA, said firms could do more to help and should encourage customers who repeatedly make minimum repayments to make bigger repayments when they can.

"We remain concerned about persistent and potentially problematic credit card debt," he said.

"We will continue to work closely with consumer groups and industry to deliver changes to help consumers gain more control over their finances."

According to the FCA's findings, the regulator surmised that 8.9% of credit cards used in January 2015 would take more than 10 years to pay off their balance.

These figures are based on current minimum repayment patterns and customers not borrowing any more money on their credit cards.

The FCA found that around 1.6 million consumers are facing potentially problematic debt on more than one credit card, and is now proposing remedies to help people budget more efficiently and repay their debt more quickly.