Consumer credit on the rise

Unsecured consumer credit borrowing rose in February, new data has shown.

Bank of England figures have shown that while the increase in unsecured credit was nil in December and £0.2 billion in January, it was £0.4 billion in February.

One feature of this was that the increase came entirely from the loans and other advances category, with no net increase in credit card spending.

This may suggest that some consumers are looking at debt consolidation loans as a means of switching their credit away from plastic, which might help if it means less interest is being paid each month.

Overall, the general trend in the last year has been for credit card lending to fall and the latest data may represent a continued shift away from the use of such instruments as a means of funding consumer spending.

A recent poll by GfK NOP on behalf of the Financial Services Compensation Scheme found 81 per cent of those with serious debts are trying to pay these down.

By James Francis