We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here.

Consumer credit falls by 6% as families repay debt

Fall in store card lending even more pronounced

Row of credit cards

A Best Rate credit card can be a cheap and convenient way to borrow

Consumer credit lending fell by 6% in 2010, according to latest figures from the Finance & Leasing Association.

December, traditionally a strong month for credit card borrowing, saw a year-on-year fall of 5%, reflecting consumers’ pre-Christmas reticence to spend on the high street. Store cards and store instalment credit fell by more than a quarter each.

Car finance was the only lending sector that increased year-on-year, showing a 9% jump compared with 2009.

Credit results are unsurprising

Which? credit expert Martyn Saville commented: ‘It’s not at all surprising that consumers are paying back credit, rather than applying for new credit cards and loans. With thousands of jobs at risk over the coming year, it makes sense for many families to reduce their exposure to debt.

‘It’s good news that borrowing has dropped significantly – most come with very high interest rates and far too often these cards are given without sufficient credit checks.

‘The only sector to show growth during 2010 was car finance – again, this is unsurprising. In a difficult consumer environment, car retailers need to entice customers into buying a new vehicle. Making car credit more readily available is one way to draw in customers.’

Save money by switching credit cards

If you need a loan or other form of finance, choose the best option for you by reading our guide Your loan options.

To find out how much money you could save by switching to a new credit card, try out the free Which? credit card switching calculator. You can then find the best deals by reading the Which? 0% balance transfer credit card reviews and our reviews of the best credit cards for using abroad.

pound coins

Which? Money when you need it

You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.

Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.

Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast

For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.

Back to top
Back to top