Consumers ‘to focus on clearing credit card debt’ in 2012

Consumers will focus on reducing their credit card debt in 2012, with switching to cheaper rates being a common way of attempting this, it has been predicted.

Head of Credit Cards at Moneysupermarket.com Hannah Skenfield said: "We saw the launch of a 24 month balance transfer card in 2011 and I would expect a similar amount of competition in the market in 2012, particularly at the start of the year when lenders will look for people who are refinancing their debt."

Those keen to reduce their card debt may find that switching is harder to do because they get turned down for a new product, in which case measures such as a debt management plan may help.

Another prediction from the website's expert is that payday loans will continue to become more popular.

Head of loans Tim Moss said these will be used by many for "month to month" financing along with overdrafts, while unsecured loans in general will remain popular.

Such a situation may leave some people in deep financial difficulty as the cost of financing a payday loan can be so high, should it not be fully paid off at the first time of asking and have to be rolled over.

A further prediction by the site – via mortgage spokesperson Clare Francis – is that the cost of home loans will remain low, which may help those struggling to avoid repossession.

This view may be strengthened by news today (December 21st) that the minutes of the Bank of England Monetary Policy Committee's latest meeting showed all nine members supporting the maintenance of the base rate at 0.5 per cent.

By Joe White