Credit crunch?

Question

in the UK is there something called a credit card crunch that's happening that stops u being able to pay for thing on your credit card

can u tell me more about it please

Answer 1

The credit crunch hasn't yet affected credit cards that much.  The main problem now is with taking out mortgages to buy real estate.

Banks have loaned a lot of money to people who may not be able to pay it back.  And these people have used their borrowed money to bid up real estate prices far beyond what the real estate is worth.

Now a lot of people cannot pay back their loans.  And banks cannot sell the overpriced real estate to get their money back.  Which leads to a credit crunch, i.e. banks have lost a lot of money and they don't have much money to lend to people.

A lot of people have run up their credit card debts too.  And many of them have difficulty paying back these high interest loans.   If the unemployment goes up.  And a lot of people default on their credit card debts.  Then credit cards can also become a part of the credit crunch.