Consumer credit spending increases by 7%

As the recession continues to put a strain on household finances, consumers are increasingly turning to credit to stay afloat.

To get the most competitive interest rates and rewards on your credit card, you can compare credit cards with Propertywide.

Figures from the Finance & Leasing Association (FLA) show that in a year-on-year comparison, consumer credit borrowing from FLA members leapt by 7% in the second quarter of 2012.

This brings the total FLA consumer finance figure at the end of the second quarter to more than £13 billion.

At a figure of £685 million, consumers’ reliance on store instalment credit to purchase items including fridges, washing machines, electronics and furniture continued to grow, rising by 25% compared to the second quarter of 2011.

Second mortgages increased by 12% to reach £ 77 million in June, while spending on credit cards and personal loans also inched up by 1% to more than £8 billion.

Car finance also shot up 21% reaching more than £4 billion, compared to figures from the second quarter of 2011.

Further data from the FLA shows the most popular product for motorists was Personal Contract Purchase, followed by Hire Purchase and leasing.

“June delivered the sixth consecutive month of growth in the total amount of consumer credit provided by FLA members,” said Fiona Hoyle, Head of Consumer Finance at the FLA.

“Growth in car finance and store instalment credit has been helped by the good deals currently on offer via retailers and car dealers. Consumers are taking advantage of these to spread payments into manageable monthly sums.”

While several areas of credit borrowing increased in the three months to June 2012, store card borrowing fell by 16% to £348m at the end of the second quarter.

To get the most competitive interest rates and rewards on your credit card, you can compare credit cards with Propertywide.

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