A quarter (26%) of UK homeowners have reported missing a credit card payment in the last two years, according to a new study by Pepper Money. These findings paint a stark picture of UK consumer borrowing habits and the potential impact it may have on future creditworthiness.
One in ten (12%) have missed a credit card payment in the last six months, as consumers struggle to balance their financial commitments in the face of a challenging UK economic environment.
Despite average APRs now hitting 21.54% as of May 2025, nearly a third (28%) of borrowers admit to not paying their credit card off in full every month. Paying off a credit card balance in full each month avoids interest racking up. While some consumers may be taking advantage of interest free introductory periods offered by many credit card providers, it is essential they maintain financially responsible habits over the long-term.
7% of borrowers admit to making only the minimum payment on their credit card each month, risking potentially eyewatering compounded interest on their credit card balances. The longer borrowers take to pay off their credit card balances, the more interest they end up paying and the harder it can be to avoid falling into a debt trap.
Credit card debt is a hidden financial burden on so many UK households, with 33% of borrowers not knowing the APR on their credit cards, and therefore not realising how much these short-term, unsecured forms of credit are costing them.
Second charge mortgages can simplify matters for borrowers juggling multiple payments each month and also dramatically reduce monthly outgoings by securing debt against a homeowners’ property – often saving as much as £680 per month by consolidating debt.
Ryan McGrath, director of second charge mortgages at Pepper Money, commented: “Our data reveals some concerning trends among UK homeowners who are turning to short-term, unsecured sources of credit, like credit cards, without due consideration to the longer-term impact this decision can have.
“Missing payments or only making the monthly minimum can lead to an avoidable debt spiral as borrowers juggle high interest rates, often spread across multiple credit products. Second charge mortgages can support borrowers by enabling them to consolidate their debts and get on a securer financial footing. Secured against a homeowner’s property, second charge mortgages typically offer lower interest rates than credit cards, as well as predictability in repayments from month to month.
“Second charge mortgages can provide access to funds as quickly as credit cards but have the added benefit of lower interest rates without disturbing other lending products in the same way a remortgage would. The average time from application to completion is moving towards the 190 hour mark with some cases by Pepper completing in as little as three days. Second charge mortgages are a genuine alternative for borrowers looking for greater choice when it comes to responsible borrowing, leveraging their greatest financial asset to bolster their long term financial resilience.”
