By Elliot Wright, 11th January 2010
More than one millions householders used credit cards to pay
their mortgage or rent in the last year, according to research by
Shelter.
The housing charity has warned that the 6% of households using
credit cards to keep a roof over their head run the risk of
mounting up huge debts which could cause repossession and
homelessness.
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.
Credit card debts could cause
repossession and homelessness.
"If people are already struggling to the extent that they fear
losing their home, increasing credit card debt cannot be the
answer."
The charity pointed out that credit card companies are not
subject to the same rules as mortgage lenders. Once they obtain a
charging order on a property, credit card companies can go back to
the court for a possession order to force a sale to recover the
debt.
Although the highest proportion of those who pay their rent or
mortgage with a credit card were from working class professions,
the research also showed that 4% of the middle/upper class category
is also falling victim.
One of the biggest shocks, the charity said, is that 1 in 12
Londoners are resorting to plastic to pay their mortgage or
rent.
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."
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