Consumers ‘trying to reduce credit card debt’

There is a clear move on the part of many consumers to pay off their credit card debts, ahead of other money owed such as on mortgages.

Such a trend has been observed by a number of commentators and seen in surveys, with Neil Munroe, external affairs director at Equifax, stating this approach to money owed on plastic is clearly in favour.

He said: "people are reasonably savvy to know that credit card debt has a higher level of interest than other types, so are focusing on that. I think where people have the income and are benefitting from low interest rates on mortgages and the like, they are using the spare money they have to pay down credit card debt."

Mr Munroe said that there are greater problems for those who do not currently have an income that enables them to pay off what they owe on their cards, but said providers are more amenable than they used to be to negotiating a solution.

This includes both a willingness to come up with repayment plans and also greater care when setting credit limits to curb overspending.

At present there is not an increase in debt consolidation, Mr Munroe stated, but this is only because many people are trying other options.

People who owe large sums of money on their cards may wish to seek advice on how to start bringing this under control.

Evidence that Britons are seeking to get away from their old habits of piling up debt on cards has been indicated by the latest Bank of England Trends in Lending figures, which note the growth of credit is much less than it was prior to the credit crunch.

It said that it was clear many consumers are continuing to "pay down" their personal debts and said lenders expect the net flow of consumer credit to remain "subdued" in the months ahead.

Posted by Paul Thacker