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Credit card debt falls despite sustained rise in spending

In spite of 20% rise in spending, outstanding balances fall by £8.9 billion in 5 years as customers use their cards more wisely

UK credit card debt has fallen by 13% since 2008 while spending has increased by £26 billion as consumers use their cards more prudently, according to data published today [30.01.2014] by The UK Cards Association.

Outstanding balances on all credit cards in the UK have fallen by £8.9 billion - down from £65.8 billion in 2008 to £56.9 billion by December 2013.

In addition, the proportion of credit card balances bearing interest has declined steadily since 2002, down from 81% to 60% in 2013. More bills being paid in full each month, consumers paying off their outstanding balances faster, and the increased use of 0% interest deals have resulted in the decline.

Over the five year period since 2008, consumer spending on credit cards has risen by a fifth (20 per cent), from £133 billion to £159 billion a year by December 2013, with the strong growth in online retail a key driver.

Almost half (48%) of online card spending is on a credit card. Many shoppers use their credit cards to benefit from the added protection they offer. Under section 75 of the Consumer Credit Act 1974, there is additional protection on purchases of over £100 (up to £30,000) on a credit card.

The current level of credit card debt represents just 4% of the UK’s total personal borrowing.

Richard Koch, head of policy at The UK Cards Association said:

“We’ve seen a steady decline in the level of debt across the credit card market in recent years. Consumers are now using the interest free periods that credit cards offer and then paying off their balances faster.

“Responsible lending is at the heart of the industry, and the vast majority of consumers use their credit card prudently. However for those individual consumers that are facing difficulty, for example after a change in personal circumstances such as redundancy, illness or separation, there is a clearly established system of support including sources of free, independent debt advice.

“To help people manage their borrowing and get the most out of their cards, more information has been put into their hands, such as through the introduction of annual credit card statements.”

ENDS

For further information contact the press office on 020 3217 8436
Press@ukcards-ffauk.org.uk

To see the full press release, and notes to editors please click on the link below.

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