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Subprime credit cards
and problem debt

Download our summary report

4 million people in the UK have a subprime credit card

Red Card, our latest report, examines the relationship between subprime credit cards and problem debt. Subprime cards are high interest credit cards, usually targeted at people with a low income, who are unemployed or have a thin or impaired credit file.


One in three people in severe problem debt have a subprime card, which often have high interest rates (APR) of 30% or more. In a survey of our clients with subprime credit cards, 18% were unemployed when they took the card out.

4 million people in the UK have a subprime credit card. These cards have high interest rates (APR) of 30% or more

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Subprime cards are offered to financially vulnerable people

47% of our clients who took out a high interest credit card were behind on a priority bill when they applied for the card. This includes having missed rent payments, utility bills and council tax.

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Clients most often use high interest credit cards to meet living costs

Clients say the main reason they used a subprime card is to pay for living costs like food and clothes, rent and utility bills, particularly following life changes like a new baby, redundancy or ill-health.

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People with subprime cards often get into repayment difficulty

Two-thirds (67%) of our clients with a high interest credit card missed at least one monthly repayment on it, with half (52%) doing so in three or more months each year and 17% six or more months each year.

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Repayment difficulty leads to expensive long-term debt

Repaying the full balance of a high interest credit card can cost more than 100% of the amount borrowed. At higher APR levels, costs may exceed 200%.

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Subprime cards often worsen people's financial situations

79% of clients with a subprime credit card felt it had a negative impact on their financial situation. Many took out their card at a point of severe need, after which their financial difficulty worsened.

People with subprime cards often get into repayment difficulty. Two-thirds (67%) of our clients with a subprime credit card missed payments on it

Our recommendations

Our report finds that subprime credit cards lead many financially vulnerable people to pay an excessive cost for credit and experience serious debt problems.

The government and the FCA should protect financially vulnerable borrowers against products that exploit behavioural bias and lead to unreasonable and harmful costs:

Policy makers should take a preventative approach and increase statutory minimum credit card payments for new cards to the level required to clear debt without excessive cost.

Our evidence also shows there's a role for 'backstop' measures to address excessive costs by suspending interest charges for consumers in persistent debt, and limiting the cost of credit to 100% of the amount borrowed.

The FCA should take action to prevent irresponsible lending and make subprime credit cards safe for people at risk of financial difficulty by:

Strengthening creditworthiness and affordability rules to prevent harmful subprime lending to those in, or at significant risk of, financial difficulty.

Reviewing persistent credit card debt rules to provide subprime borrowers in financial difficulty with a safe way out of persistent debt.

Testing and implementing repayment models and tools that help people repay credit card debt promptly.

Investigating problems linked to the promotion and structure of 'credit builder' products through the credit information market study.