Credit card write-off figures dropping.

Fall In The Number Of Credit Card Write-Offs

Bank of England figures show a total of £740m was written off in the third quarter of this year, quite a sharp fall and the lowest write-off amount since quarter one 2008.

This could be a glimmer of hope from people’s finances as this is significantly less than the record £2.1bn write-off in quarter two 2010. This mirrors a drop in personal insolvencies and home reposessions.

What are write-offs?

When it becomes clear to a bank that it’s customers cannot or will not repay money spent on their credit cards, a bank will normally write off the debt.

This amounts to around 10% of all outstanding lending on credit cards, and clearly displays the reason for the higher rate of interest on credit cards – a higher risk to the bank equals a higher interest rate.

What about Mortgages?

The amount of write-offs on mortgages also fell, although not as sharply as credit cards, from £184m in quarter-two 2010 to £134m in quarter-three.

Overall, across all forms of lending, write-offs have fallen from £3.5bn to £1.8bn.

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