Evidence that many consumers are opting for debt consolidation, instead of taking on more borrowing, has been provided by the Finance and Leasing Asso…
Evidence that many consumers are opting for debt consolidation, instead of taking on more borrowing, has been provided by the Finance and Leasing Association (FLA).
The organisation's latest data showed that in the year to June 2011 every kind of credit offered by its members fell except for car finance, which was up by one per cent.
Against this, store card credit plunged 22 per cent, second mortgages were down by 11 per cent, second instalment credit dipped by six per cent and there was four per cent less credit card borrowing.
This meant the overall level of credit issued by FLA members dipped three per cent in a year.
Credit cards made up the majority of the £51 billion of consumer credit issued with £29 billion, while car finance was second on £13 billion.
Chief economist at the organisation Geraldine Kilkelly said: "We are still waiting for significant signs of recovery in the consumer finance markets. During the last twelve months, we have seen some markets performing better than others."
He suggested the large fall in store card use may be connected with generally subdued high street sales, but some consumers might have decided a good way to consolidate debt is by switching away from such products due to the high rates of interest some may have.
The level of concern among the public about how much they owe in unsecured borrowing was noted by insolvency practitioners' body R3, with its recent survey on the topic showing that 47 per cent of consumers are worried about the issue, seven per cent more than a year ago.
By Joe White