1m paying for homes by card

11 January 2010

Family in housing need

More than 1 million householders have used credit cards to pay their mortgage or rent in the last 12 months, a new survey by Shelter reveals today.

Despite restrictions on credit and reports of many people paying off personal debt, an exclusive YouGov poll for our ROOF magazine reveals a disturbing picture of over a million people taking desperate measures with credit cards to keep a roof over their head.

The highest proportion of those who pay their rent or mortgage through credit card were from working class professions (8% of those in the C2DE social grouping), but the poll also showed that middle/upper class (ABC1 category) are falling victim, with 4% of respondents saying they use credit cards in this way.

Many could find themselves facing homelessness this year because of their huge debts, especially as defaulting on credit card payments could trigger repossession in the worst case scenario.

The survey asked if respondents had paid their rent or mortgage by credit card in the past 12 months. 6% of those who were liable for the rent or mortgage said yes – suggesting a national figure of more than a million people. 

The charity is issuing a stark warning to people about the dangers of using credit cards which could result in the loss of their home. 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 people’s property, credit card companies can go back to the court for a possession order to force a sale to recover the debt.

Kay Boycott, Shelter's director of policy and campaigns 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.

Ms 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.

'Shelter has a network of advice services across the country who are ready to give free advice on a range of subjects including debt and housing issues so we would urge anyone struggling to get in touch today. The sooner they seek help, the more options are available.'

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.'

Read a real life story about Sarah, a young woman who is in danger of losing her home due to credit card debt.  

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