Brits Managing Credit Card Debt Better
Brits are starting to pay off their credit card debts in greater numbers, encouraging new figures have shown.
The number of Britons paying off their credit card balance in full each month has risen, as consumers start to tackle their debts.
Figures from the Association of Payment Clearing Services (Apacs) indicate that UK credit card spending has steadied and the level of repayment is rising, signalling that people are becoming more cautious about debt.
The number of credit card transactions conducted in Britain fell by one per cent to 2.1 Billion during 2005 and the number of cardholders repaying their credit card debt in full each month increased from 56 per cent to 59 per cent.
"Our figures show that UK credit cardholders are reining in their spending and concentrating on repayments - a trend which has continued throughout this year," Sandra Quinn of Apacs commented.
"Nervousness about economic growth could well have contributed to the reduction in credit card spending and higher repayments, alongside media speculation about whether consumers are borrowing responsibly."
The Apacs report indicates that 95.3 per cent of credit card spending last year was repaid, the highest proportion since 1998.
Recent data for August from the Bank of England showed that credit card users repaid £311 million more than they borrowed for the first time since May 1994.
Spending on credit cards is expected to rise in the lead-up to Christmas 2006, but the overall debt figures for the UK are looking increasingly positive.
Finance experts have increasingly expressed concern about soaring levels of consumer debt in Britain. The UK's debt mountain is now more than £1 trillion and British personal debt accounts for around half of the European total.
A study by research group Datamonitor found that Britons owe an average of £3,175 each, compared with an average of just £1,558 for the rest of Europe.
Borrowers are facing high levels of debt and mortgage repayments are responsible for a growing proportion of homeowners' income, with many people deferring saving or even having children as a result of debt.
Various studies have indicated that the number of Brits declaring bankruptcy in the UK has risen in recent months and there have been higher levels reported of house repossessions and people defaulting on loans.
Consumers are advised to attempt to pay as much off their credit card debt each month, as paying the minimum whilst continuing to spend can leave them struggling.
The Bank of England's Monetary Policy Committee (MPC) raised the base rate of interest in August this year by a quarter point to 4.75 per cent. Economists are widely predicting a further increase before the end of the year, possibly next month, taking the cost of borrowing to five per cent.
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