The credit fuelled spending boom begins to subside leaving record debts and increasing bankruptcies......................
Barclaycard shuns applicants
Sean Poulter, Daily Mail
22 February 2006The company has set aside a record £1bn to cover losses generated by customers who cannot or will not pay their credit card bills.
As result, profits on Britain's biggest credit card slumped by almost
20% to £687mn.MPs, consumer groups and debt experts have been complaining for two years that banks have been chucking cards and loans at people without checking their finances.
Barclays revealed yesterday that it is now turning away 55% of Barclaycard applicants. The details came from Gary Hoffman, the head of Barclaycard, who denied the firm had been too lax in its lending in the past.
Mr Hoffman suggested that an increase in the number of bankruptcies and a change in the rules is one reason why the card's bad debt figure has risen.
There was a 45% increase in personal insolvencies last year, taking the total to 67,580. Someone who is declared bankrupt can now have this discharged after one year, rather than three years in the past.
Where there are no assets, bankruptcy means Barclaycard and the banks cannot get their money back.
Mr Hoffman said: 'The changes in the rules were geared towards helping small business, but the impact has been in the consumer sector where people are using them to get relief for their debts.'