The UK’s ailing economy has meant that consumers are now carefully guarding their finances; with credit card lending last month falling by its greatest rate since August 2006.
Credit cards can offer a range of benefits to consumers. To find a good deal, you can compare credit cards with Propertywide.
According to figures from the Bank of England, the figure for repayments on credit cards surpassed the figure for borrowing by £118 million in April.
However, while consumers have reined-in their reliance on plastic over the last four to six months, figures for borrowing via loans and overdrafts continued to grow over the same period. As a result, the total figure for lending over the last six months rose by £1.4 billion.
“A cautious approach to credit card debt in the current climate is no bad thing. Many households have a fair amount of debt already and so a move away from credit card debt is far more sensible than ‘maxing out’,” said William Hunter, of Hunter Wealth Management.
“The irony is that an economy where consumers are cautious is going to struggle to grow. Debt pay-down is a double-edged sword and the Bank of England knows that.”
Other data has also shown that consumers are turning to their savings to keep them afloat financially, rather than take out more credit.
Figures from the Building Societies Association have shown that withdrawals from accounts in mutual societies outstripped new saving last month. This was the fifth consecutive month that the trend occurred.
Mortgage lending remained relatively static compared with recent months, the Bank of England’s figures showed.
The number of home loans approved for house purchases rose slightly from 51,067 in March to 51,823 in April. However, the latest figure was down on the previous six-month average.
“Relatively tight credit conditions may well make it hard for many people to get a mortgage,” said Howard Archer, of IHS Global Insight.
“On top of this, some mortgage rates have risen recently due to lenders’ higher borrowing costs in wholesale markets and this could well weigh down on housing market activity.”