Credit card debts 'could lead to repossessions'

People who do not keep up with the repayments on their credit cards may be at risk of losing their home as lenders seek to claw back some of the money they are owed, it has been claimed.

This is according to James Falla, managing director of debt consultancy firm Thomas Charles, who said that "robbing Peter to pay Paul" is not an effective way of paying bills and that homeowners should not take out credit if they cannot pay it back.

"More recently what credit card companies have been doing is applying to take charges over property [belonging to] people in debt difficulties. That, potentially, is a longer term consequence of the situation we've got and one that is perhaps a bit more serious than it has been in the past," he commented.

According to recent research by uSwitch.com, credit card providers could be putting themselves and consumers at risk by not making sufficient checks during the application process.

In the past year, 84 per cent of successful credit card applicants were not asked to provide any proof of income to support the figures stated in their application form.

Five per cent were found to have lied about their income when applying for a credit card, securing over £693 million worth of credit.