Debt consolidation may be in evidence as lending falls

Unsecured consumer credit borrowing saw a decline in the year to September 2011, according to new figures.

The Finance and Leasing Association (FLA) statistics for the 12-month period found that the overall level of borrowing issued by its members was one per cent less than that supplied in the 12 months to September 2010, at £52.776 billion.

Of this figure, £32.775 billion was accounted for by personal loans and credit cards, with this also falling by one per cent.

Larger reductions included nine per cent drops for store instalment credit and second mortgage lending, while storecard lending plummeted by 20 per cent.

The latter figures may be due to the high level of interest charged on some cards, as well as lower consumer spending in the shops.

Car finance was one form of credit to buck the trend, with lending up two per cent.

Reflecting on the overall situation, FLA head of consumer finance Fiona Hoyle remarked: "September's consumer credit borrowing shows a slight improvement on last year, but not on the High Street."

Those keen to lower their credit card debt will be in good company, as the FLA figures are not the only ones produced recently to indicate consumers are looking to get a grip on their borrowing.

For many months now the Bank of England's monthly Trends in Lending report has shown consumers are paying off more from their cards and other lending than they borrow and in the latest case, figures for October showed no growth in consumer credit lending.

This was in contrast to a rise of £0.6 billion in September and £0.4 billion in August.

By James Francis