Despite the fact that the UK’s economy has pulled out of a double-dip recession, research has indicated that British consumers are still increasingly relying on borrowing to make ends meet.
Figures from the British Bankers Association (BBA) revealed that unsecured consumer credit shot up by £155m in September, only the second time a rise has been recorded in the past 16 months.
Consumer spending on credit cards hit its highest level since July 2011, with £346m of purchases put on credit cards last month. This figure outweighed the £191m in repayments on personal loans and overdrafts made in September.
Although consumer credit borrowing has increased overall, BBA statistics director David Dooks argued that consumers are keen to rein in the finances amid an uncertain economic climate.
He said: “Households are reducing borrowing requirements and have no appetite to take on more/new debt.”
“Where they can individuals are putting money aside for household expenditure.”
Consumer champion Which? has recently called for the government to ensure that lenders who benefit from the Funding for Lending scheme offer lower borrowing rates to all, and not just those with significant equity.
Richard Lloyd, Which? executive director, said:
“The Chancellor must put tougher obligations on banks that get cheap finance through the Government’s Funding for Lending Scheme so that more is done to help those who are struggling through no fault of their own, and especially to ensure that mortgage prisoners and first time buyers can benefit from lower borrowing costs.”
A number of lenders including NatWest, RBS and Barclaycard have extended 0% interest deals on their balance transfer credit cards to 23 months, while MBNA has introduced a card with a low 1.25% handling fee on its balance transfer card, offering 0% interest for 14 months.
To get the best rates and rewards on your borrowing, you can compare credit cards with Propertywide.