1 million use credit cards to pay mortgage/rent

Many could find themselves facing homelessness this year because of their huge debts, especially as defaulting on credit card payments could trigger repossession in the worst case scenario.

The survey asked if respondents had paid their rent or mortgage by credit card in the past 12 months. Some 6% of those who were liable for the rent or mortgage said yes – suggesting a national figure of more than a million people.

The charity is issuing a stark warning to people about the dangers of using credit cards which could result in the loss of their home. Credit card companies have to recover their debts and are not subject to the same rules as mortgage lenders. Once they obtain a charging order on people’s property, credit card companies can go back to the court for a possession order to force a sale to recover the debt.

Kay Boycott, director of policy and campaigns at Shelter said: "This is a shocking discovery, that over a million households in Britain are in such desperate circumstances that they need to borrow money on credit cards to pay for basic housing costs.

"If people are already struggling to the extent that they fear losing their home, increasing credit card debt cannot be the answer."

One of the biggest shocks is that 1 in 12 Londoners are resorting to plastic to pay their mortgage or rent.

Ms Boycott said: "It is absolutely vital that every single person using credit cards in this way seeks advice urgently to get the help they need to ensure they don’t lose their home.

"Shelter has a network of advice services across the country who are ready to give free advice on a range of subjects including debt and housing issues so we would urge anyone struggling to get in touch today. The sooner they seek help, the more options are available."

Martin Lewis of MoneySavingExpert.com, said: "Mortgages are a debt, credit cards are a debt. For all but the seriously financially savvy, using credit cards to pay rent or mortgages is a mistake that can store up mammoth financial problems for the future. If you can’t afford to pay your housing costs lumping up the borrowing is never the answer – far better is to seek help as soon as possible and start managing the problem.

"It’s great to see housing charity Shelter adding to the weight of non-profit debt counselling help for those in crisis; and I would urge anyone worrying about home related debt problems to get in touch with them  – it should stop a few sleepless nights."

Have your say on this story using the comment section below

0 thoughts on “1 million use credit cards to pay mortgage/rent

  1. Paul Cole

    These statistics puzzle me….if 6% of the respondents to the survey have said they have used a credit card, how does this equate to more than 1 million people? By my calculations if 6% = 1 million, then 100% = 166 million, approx 2.5 times the whole of the UK population! I suggest more scaremongering going on…

  2. Anon

    if you ask me, unsecured debt is the main reason we are all in this situation, yes lenders did not do enough checks on applicants, for mortgage but when you get a mortgage these credit card & loan companies throw themselves at you, sending you pre completed applications that just require a signature, NO proof of income is EVER required and no questions are asked to ‘other commitments’ many clients i have seen tell me ‘ i thought they wouldn;t give it to me if they didnt think could afford it, one client had £100k on credit cards? how can that be allowed!? at least 50% did not really understand how they work or the implications of what happens if you don;t clear them off befire the 0% runs out, most of my clients had no intention of clearing them off anyway, they were able to borrow vast sums £15k-20k with a minimum payment of £120pm they bought cars etc, thinking they were keeping on top of it by paying the minimum payment! now i should imagine credit cards are the only things some people have left, they’d have been well able to keep up their mortgage payments if they hadn;t been ‘given’ 3 credit cards on top, but now their sadled up to their eyes in debt and no-one is investigating this area of the market, it;s madness!

  3. Oliver Darraugh

    The Office of Fair Trading challenged 12 companies at the end of July offering homeowners the chance to sell home & rent back. The challenge was made regarding websites and adverts, which was said to mislead consumers into believing that they could rent back for life, when this is not true. As firms are now regulated by the Financial Services Authority and the OFT keeps a watchful eye on them more challenges may be made in the future.