Worries over renting on borrowed money

Credit Cards

Credit Cards

The number of people who use credit cards to pay rent or mortgages has risen this year, a charity says.

A recent poll asked people whether or not they had borrowed money on a credit card to pay for rent, or to make payments on their mortgage in the last 12 months. 6% of respondents, around 2 million people claimed that they had, which Shelter say is more than last year.

A spokesman from the Council for Mortgage Lenders (CML) claims that this figure would mainly apply to people who pay rent, as most mortgage payments would be taken out of a bank account rather than paid from a credit card. However, a report commissioned by the CML states that 2% of mortgage payers have used a credit card to pay for their payments in the past. With only half of these paying off the balance at the end of the month.
Shelter say that there is evidence of people withdrawing large amounts of money on their credit cards, which is then used to pay housing costs. Despite the high levels of interest.

They have also urged anyone who has been using a credit card to pay for their rent or mortgage, to immediately seek expert advice.

Campbell Robb, chief executive of Shelter says “Using credit cards to pay the rent or mortgage is simply robbing Peter to pay Paul. With the average credit card interest rate now standing at over 16% it is the worst possible course of action,”

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