Credit card rates have been rising for borrowers The level of debts written off because defaulting borrowers will never repay them shot up in 2009, Bank of England figures have shown. In 2009, financial institutions wrote off £4.12bn in credit card loans, up from the previous record amount in 2008 of £3.2bn. The value of mortgages written off more than doubled, but from a lower level, from £408m in 2008 to £984m in 2009. The figures reflect the effect of the recession on personal debts. Unrecoverable Other loans written off jumped from £3.2bn to £4.2bn - pushing up the total write-offs by UK lenders to people from £6.9bn to £9.3bn. In addition to this, financial institutions wrote-off £5.9bn that was lent to non-financial businesses, as well as £154m lent to other financial corporations. Banks have been revealing their own specific write-off levels during the current reporting season. These institutions set aside millions of pounds to cover potential losses on their loans, but only when the loss is confirmed as unrecoverable is the money finally written off. The effect of the increased losses has been felt by those people who borrow but make repayments on time. It became more difficult during the recession for first-time buyers to get on the property ladder as lenders were making their criteria more stringent. Last month, financial information service Moneyfacts said that credit card rates had risen to their highest level for 12 years - at 18.8%. Bank of England figures suggested the rise was not so acute. It said the average interest rate on credit cards offered by banks and building societies has risen to its highest level since June 2006. At the end of January, the rate was 16.4%.



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