Many Pay Monthly Household Bills With Credit Cards

11 January 2010

More than one million householders have used credit cards to pay their mortgage or rent in the last 12 months, a new survey by Shelter has revealed today.

The highest proportion of those are from working class professions, but the middle/upper classes are not exempt, with four per cent of respondents also covering housing costs with credit.
Many of these living so precariously could find themselves facing homelessness this year burdened by huge debts and the chance of a credit card default.

The charity is issuing a stark warning to people about the dangers of using credit cards.  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 a property, credit card companies can ask the court for a possession order to force a sale and 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.

Boycott continued: "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.

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."

Source - Introducer Today.