Adverse Mortgages UK

Lending on credit cards in the UK fell by its biggest margin ever in August as higher borrowing costs begin to bit, official figures have revealed.

Figures from the Bank of England showed that credit card lending fell by £311 million during August, the biggest decline since record began in 1993.

Economists have attributed the fall in credit card lending, which follows a series of modest gains, to a combination of higher credit card fees and borrowing costs.

Reuters quoted Alan Castle, an economist at Lehman Brothers, saying: "You could make an argument that the combination of higher Bank of England rates and higher spreads on credit cards are starting to bite."

The figures also suggest that people may be tightening their belts after a record number of insolvencies.

Indeed, research released last week showed that UK consumers are responsible for a third of all unsecured debt in western Europe, with individuals having on average twice the debt of our European cousins.

The news also follows figures which showed people are increasingly repaying credit card debts by taking out cheaper forms of credit, such as remortgaging their house.

Credit card borrowing in the UK currently stands at some £55.4 billion, according to Apacs, the UK payments association.


© Adfero Ltd

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