Second charges have a role to play as credit card debt hits new highs – Binney

For some people, credit cards provide a useful way to manage that spending. For others, however, balances can remain long after the summer has ended, adding to existing loans and other unsecured commitments.

The latest figures show just how large the issue has become. The latest UK Finance data shows there were 442 million credit card transactions in July, 6.5% more than in July 2025. The total spend of £23.8bn was 4.7% higher than July 2025.

Outstanding balances on credit card accounts have grown by 9.2% over the 12 months to July and 47.8% of outstanding balances incurred interest, compared to 47.9% in July 2025.

Figures like these should naturally prompt conversations with clients about the amount of unsecured debt they are carrying and whether their current repayments remain suitable. For some homeowners, a second charge mortgage may provide one answer.

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The second charge solution

This can be particularly useful where a client has a competitive rate on their current mortgage or would face a large early repayment charge if they moved to a new deal.

Instead of remortgaging the full balance simply to raise the money needed to clear credit cards and loans, a second charge can sit alongside the existing mortgage.

For suitable borrowers, this may also allow several unsecured commitments to be brought together into one monthly payment.

The case for considering a second charge can become even stronger where the client’s circumstances are less straightforward.

A borrower may have built up unsecured debt following a change in circumstances, for example, while also having adverse credit, self-employed income or an irregular income pattern. These factors can make it harder to meet the criteria of some mainstream mortgage lenders.

There may also be clients who need to consolidate debt while raising money for another purpose at the same time. As we see regularly, capital raising needs do not always fit neatly into one category. A client may want to repay credit cards while also carrying out home improvements, settling a tax bill or meeting another major cost.

A second charge can offer the flexibility to consider these needs as part of the same application, subject to the lender’s criteria and a full assessment of affordability.

That does not mean debt consolidation through a second charge will be suitable for every borrower.

Turning credit card or personal loan debt into borrowing secured against a property is a major decision. Extending debt over a longer term can also mean paying more interest overall, even if the new monthly payment is lower.

There is also a clear difference between someone who has built up credit card balances because of a one-off period of higher spending and a borrower who is using credit each month to meet normal household costs.

In the latter case, simply consolidating the debt may not address the wider issue.

This makes a full review of the client’s circumstances vital, and brokers need to understand how the debt arose, what the client is currently paying and whether the new commitment will be sustainable.

They should also consider the other options available, including a further advance or remortgage, before deciding whether a second charge is suitable. However, what the latest credit card figures do show is that unsecured debt is becoming a bigger part of many household balance sheets.

The need for brokers to discuss debt earlier with their clients is clear, and for cases involving adverse credit, unusual income or several different capital-raising needs, working with a lender that understands more complex circumstances can also make a major difference in finding the right outcome for the client.