As the current economic climate leads many to find ways to cut back their outgoings recently published figures indicate that credit card borrowing rates for the month of November experienced a marked decrease.
The month of November is traditionally seen as a high-volume month for credit and debit card usage. Many consumers run up debt through gift purchasing in the Christmas season, yet the 2010 Christmas season saw a reduction in the number of people paying for their purchases with credit.
New figures show that card lending fell by a rate of 25 per cent last November in comparison with the 2009 shopping season. Additionally only £202 was the average amount advanced through store cards during the same period. Instore instalment finance rates also declined by 11 per cent compared to the previous year’s levels.
Not all consumers decided to raid their savings accounts in order to buy presents for Mum and Dad, however; while credit card use plummeted the number of loans that consumers sought from personal and business bank account providers rose. The Finance and Leasing Association stated that there was an increase of approximately 34 per cent in personal lending throughout the month of November.
Despite the decline in credit card use for the month, consumers were still heavily reliant on card lending throughout the past year. Statistics for 2010 indicate that approximately £2.71 billion worth of lending originated through the use of consumers’ credit card use.
Industry experts agree that the shift from card lending to personal bank lending through the holiday season was most likely prompted by the more attractive rates inherent in personal loans. One expert commented that consumers need to do more in practicing ‘smart borrowing techniques’ to aid economic recovery in the UK.