Credit cards blamed for huge increase in bankrupt women

A huge rise in the number of women going bankrupt was blamed yesterday on a dangerous combination of large mortgages, heavy spending on credit cards and lower pay than their male colleagues.

The proportion of women who go bankrupt has jumped to more than 40 per cent over the last five years, according to the first piece of research into the subject by a firm of accountants. Official figures have never analysed the number of women affected.

Keith Stevens, an insolvency partner from the accountants Wilkins Kennedy, said that he helped female clients who had between 30 and 40 credit cards and debts of up to £100,000 despite earning just £25,000.

When he first started work in the insolvency industry in 1977 he rarely encountered a woman with financial problems.

Mr Stevens said: "The root of the problem is that women have seen the rapid growth in their financial independence outstrip the rise in their incomes. The gap between incomes is narrowing but women are taking on more financial risk and may need to moderate their spending in the short term."

At the beginning of the 1980s less than 10 per cent of women had a mortgage, a figure that has more than doubled to almost 25 per cent today, just one example of the extra financial burden put on women. The average mortgage taken out has now reached £90,000.

Mr Stevens also blamed the credit card culture for much of the problem, particularly the common practice of transferring debt from an existing card to a new one offering zero per cent interest rates. "Rather than adjusting their standard of living, the people who do this often continue to live beyond their means and run up fresh credit card bills," said Mr Stevens.

He added that women were often less able than men to make the necessary changes to their lifestyle.

Also, women tend to have built up a much smaller pot of savings than men, according to the latest official figures from National Savings & Investments.

The pay gap between women and men also remains significant, with women typically earning almost 20 per cent below a man in the same position.

Overall, the number of bankruptcies has soared over the past year. Between January and March last year, there were 8,103 individual bankruptcies, compared with 10,091 in the same period this year.

Wilkins Kennedy conducted its research by making a random selection of 800 bankrupts in England and Wales, and calculating the percentage of women, which jumped from 32 per cent to 42 per cent.