Consumers ‘cutting back’ on credit card debts

Consumers have reduced their credit card debts by 13 per cent since 2008. 

The UK Cards Association has found that there has been a significan…

Consumers have reduced their credit card debts by 13 per cent since 2008. 

The UK Cards Association has found that there has been a significant reduction in the amount of money owed, despite the fact spending has actually increased by 20 per cent over the time period. 

This demonstrates how many Britons are adopting a financially prudent attitude to spending, as they don't want to end up owing thousands of pounds by living beyond their means.

However, despite the positive figures, outstanding balances on all credit cards in the UK still amounted to £56.9 billion in December 2013, highlighting how there is still a long way to go before the situation is brought under control. 

The number of people clearing their credit card bills at the end of the month is increasing – in 2002 some 81 per cent of balances had interest attached to them, this has now reduced to 60 per cent.

Almost half (48 per cent) of online card spending is on a credit card, with many customers taking advantage of the extra protection offered by plastic. Purchases of over £100 (up to £30,000) on a credit card are covered under section 75 of the Consumer Credit Act 1974.

Richard Koch, head of policy at The UK Cards Association, said: "We've seen a steady decline in the level of debt across the credit card market in recent years. Consumers are now using the interest free periods that credit cards offer and then paying off their balances faster."

He added it is good to see the vast majority of people are being prudent with their credit cards, but he still thinks more can be done to help those in need. For example, more information could still be provided and he would like to see the introduction of annual credit card statements.

By Joe White

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