Consumers focus on debt repayment

26/01/12

By Emma McFarnon

Britons put a lot of their Christmas splurge on their credit cards in December, but still managed to pay off more than they borrowed on plastic.

Faced with uncertainty, joblessness and soaring living costs, savvy consumers repaid £7.4 billion in December, compared with new spending of £7.2 billion.

The figures were unveiled by the British Bankers' Association (BBA). Its High Street Banking report also showed December was the strongest month of 2011 in terms of new mortgages - some £9 billion worth were made. This is up from £8.4 billion lent in November and a 12% rise on the same period in 2010.

BBA statistics director David Dooks said: "The household sector generally is focusing on debt repayment amid inflated household expenses and a continuing air of uncertainty, so we see a reluctance to let net borrowing rise, with people preferring to use their bank account cash for expenditure."

The latest figures show a £400 million rise both in new spending on cards and on repayments, when compared with the previous month, suggesting households are steering away from increasing their debts.