UK consumers are among the most indebted in the world. The average UK family owes £7,900 on personal loans, credit cards and overdrafts.
Type this topic into your search engine and the results are endless, money managing and saving tools are readily available with little or no cost. With financial matters appearing so frequently in the news, are people now starting to get on top of their finances?
Card repayments overtook new borrowing by £118 million in April, the largest amount since August 2006, when they outweighed borrowing by £152 million. Coupled with the younger generation showing an inclination for debit cards and digital technology, this trend indicates that the use of credit cards will continue to fall. Suggesting that debit cards and other innovations will force the credit card into a dwindling market.
PricewaterhouseCoopers' (PwC) recent report argued that credit card use could plummet into permanent decline. The rise of digital technology such as mobile payments and payday lenders is changing how people access credit.
Melanie Bowler, an economist at Moody's Analytics, said: "Households are favouring paying down debt, rather than undertaking new borrowing”. Consumer Credit Counselling Service (CCCS) saw a 27% increase in the number of people contacting it for help with council tax arrears, from 13,353 in 2010 to 16,958 in 2011. The average amount owed in council tax arrears also increased, from £675 in 2010 to £717 in 2011. Suggesting people are looking for alternative solutions, rather than paying a bill on credit.
However with the rise in funds borrowed from payday loan companies, households run the risk of purely shifting their debt to another commodity. With 2012 not yet bringing an end to financial uncertainty, demand for credit is likely to remain high; however credit cards are no longer the favourable source.
Lauren Overton
Consumer Analyst
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