Credit card borrowers utilising different methods of finance
Over recent months some agencies have reported that credit card borrowing has taken a tumble in the UK, and have stated that this indicates that consumers in the UK are gaining a tighter reign over their finances, and are learning how to control their borrowing and repayments amidst concerns over the high levels of consumer finance in the UK. However, some experts are stating that this may not be the case at all.
 According to some the reason why credit card borrowing may have fallen recently is not due to consumers gaining more control over their spending and borrowing habits, but because consumers are finding alternative methods of taking out finance such as loans and overdrafts. In addition to this mortgage borrowing has gone up, which means that some of the people that may previously have been spending on their credit cards may have had to reduce credit card spending simply because they have taken out another type of finance in the form of a mortgage.
One official stated: 'The decrease in credit card borrowing simply indicates that people are borrowing in different ways. The increase in loans and overdraft borrowing reflects the evidence from Citizens Advice Bureaux that debt enquiries continue to rise in 2007 and will exceed the 1.4m debt enquires we dealt with in the last financial year.'
Another said: 'People are looking more closely at their borrowing decisions. Rising house prices means there is equity available to be unlocked by homeowners. People are choosing that method of borrowing rather than taking out a personal loan or putting money on a credit card, which might have high monthly costs.' Another contributory factor in terms of reduced borrowing on credit cards is thought to be a reduction in the number of 0% cards on offer on the market last year.
Tom Smith
30th January 2007
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