UK Credit Card Debt Beginning to Fall

UK consumers appear to be heeding warnings regarding record levels of personal debt as credit debt levels are falling. Figures released by the Consumer Credit Counselling Service (CCCS), reveal that the amount borrowed by UK consumers on credit cards is falling each month by hundreds of millions of pounds.

The figures are part of the CCCS's quarterly report and show that consumers appear to be a little more cautious when it comes to their credit cards as a form of credit. This is particularly good news as Britain's personal debt mountain (including mortgages) hits £1.3 trillion.

Over the last six months, credit card lending dropped by an average of £222m a month. August of last year saw consumers repay more than they had borrowed on their credit cards for the first time in over a decade.

Malcolm Hurlston, CCCS chairman, said: "The slowing of credit card borrowing indicates that changes in the economic climate in 2006, including interest rate rises, utility hikes and a rising housing market, have affected behaviour.

"Consumers are clearly looking to rationalise their finances. The appetite for new credit has also fallen with the decline of fee-free balance transfers and zero per cent deals."

However, despite the encouraging signs that UK consumers' seem to be taking a prudent approach to credit cards, total unsecured lending grew by more than 6 per cent between October 2005 and the same month in 2006.

The CCCS also reported that the aver4age debt of those consumers, who contacted them, had risen to £31,000.

Many experts predict 2007 will see 10,000 insolvencies each month as consumers continue to struggle with their personal debt. The last three months has seen almost 28,000 people declare themselves insolvent.

Alisdair Milton
15th January 2007

More Information:

• Causes and Cures Of Credit Card Debt
  For some, credit cards can prove a temptation too far, and soon they find themselves in debt. Simple precautions will keep the savvy card holder from such dangers.
• Tips On How British Women Can Climb Out Of Their Growing Credit Card Debt
  More women in the UK are spending money on credit cards than at any other time. In percentage terms, there are now more British women spending more each month than they earn.
• Credit Card Benefits
  A credit card can be a highly effective and flexible financial tool for the smart shopper – and saver. It has many obvious advantages over cash and cheques – and a few hidden ones too!

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