Household budgets are still continuing to be squeezed amidst an uncertain economic climate, with the latest figures from the Finance & Leasing Association (FLA) revealing that consumers are still turning to borrowing in order to make ends meet.
The FLA reported a month-on-month surge in consumer credit lending by its members, who occupied almost 30% of the UK consumer credit market in the twelve months up to October, rising by 7% to reach to £4.6bn in October 2012.
Although lending on credit cards and personal loans dropped by 5% year-on-year, this type of borrowing still accounted for the largest share of credit lending at £2.6 billion. To get the best interest rates on your borrowing, you can compare credit cards with MoneyExpert.
Car finance accounted for the second largest share of new consumer credit lending in October 2012 at £1.5 billion, this was followed by store installment credit (£257 million), store card credit (£121 million) and second mortgages (£31 million).
Commenting on the figures, Fiona Hoyle, Head of Consumer Finance at the FLA, said:
“Continuing growth in the intermediated credit markets – both high street and motor credit – again demonstrates the importance of responsibly-provided retail credit for consumers and the wider economy.
“Today’s figures also highlight how important it is that the Government’s proposed new regulatory regime for credit supports the continued vitality of the intermediated credit markets. Unless the time is taken to design a genuinely proportionate new system, economic growth will be put at further risk.”
Recent research from uSwitch.com revealed that almost a quarter of Brits (23%) are just breaking even at the end of the month, with nothing left in the household budget to act as a financial buffer in case of emergencies.
A further 7% of consumers have outgoings that exceed their income, leading them to rely on overdrafts (37%), savings (28%) and credit cards (23%) to make up the difference.