It seems that the credit crunch has driven desperate borrowers to their limits, with record numbers simply walking away from their debts, abandoning their repayments.

Standard & Poor, the credit agency released figures which show that the amount of charge offs, defined as payments which credit companies no longer expect to receive, have risen by three percentage points since March, now sitting at 6.9 per cent.

Prior to the onset of the credit crunch, charge offs had been falling rapidly for the past three years, as the credit market was buoyant, as was the general financial situation.

Credit card securities analyst at Standard & Poor, Mr Prashant Dwivedi, said that “the rise is all the more surprising because UK card companies had received a rude awakening three years ago as borrowers found loopholes to avoid debt repayment.”

He went on to say that “since then card companies have tightened lending criteria, raised interest rates and cut individual lines of credit to help limit losses. They imposed tougher standards long before mortgage lenders did so.”

“Also,” he continued, “the performance of some credit card-backed bonds weakened as regulators cut the maximum penalties for late payments that could be charged. The two developments had put the industry on its mettle long before the credit crunch began.”

“In a sense it was a blessing in disguise,” he said. “They got a wake-up call much earlier [than other lenders].”