Credit cards not so popular?

November 20, 2006

For the sixth consecutive month, credit card borrowing for October has a seen a substantial drop by £385 million, an increase of £155 million from September, revealed in a report by the British Bankers Association (BBA).

Whilst overall net lending to individuals rose by an underlying £5.9bn in October, credit card lending has continued to fall, a trend that has been continuing for the last six months. Other forms of unsecured credit like personal loans and overdrafts rose by £0.8 billion over October.

Consumers are starting to look at different forms of credit to finance their spending patterns and while credit cards are one of the most expensive forms of credit available, many consumers are looking at more longer term financial options that can provide a higher stability.

David Dooks, director of statistics at BBA, said "The picture in unsecured lending was mixed. Credit card lending continued to fall, as it has in most months of this year, though other consumer credit was stronger than of late"

The credit card industry has had more than its fair share of negative press this year and only last week it was reported that banks and card companies may have to increase interest rates and maybe even start to apply annual fees to make up for lost revenues.

Consumer credit rose by £398mn overall; personal loans & overdrafts rose by a £783mn compared with Septembers rise of £266mn, while credit card lending fell by a £385mn compared with an underlying fall of £230mn in September and an average monthly fall of £220mn over the previous six months.