Brits defaulting on credit as dependence on it rises

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Brits defaulting on credit as dependence on it rises

UK consumers are increasingly defaulting on their credit even as they rely more heavily on it, a new report has found.

Credit agency Standard and Poor's (S&P) study, covered by the Financial Times (FT), found that average charge-offs - repayments a credit company no longer expects to receive - rose to 6.9 per cent by the end of June, from 6.62 per cent at the end of March.

In addition, the data gathered suggested increased dependence on credit, with lending continuing to increase in 2008's second quarter.

The average rate of growth in June 2008, annualised, was 7.1 per cent. This is the highest in two years.

Prashant Dwivedi told the paper that the rise in defaults was surprising as credit companies have tightened lending criteria and increased interest.

Some credit cards now charge interest at 40 per cent, a recent study by website MoneyExpert.com has found.

The average credit card interest has now reached 17.4 per cent, according to its analysis.

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