22 February 2007
Recent figures released from the British Bankers' Association (BBA) revealed this week that while credit card spending had fallen, the number of personal loans issued in January continued at the same rate as in previous months.
David Dooks, BBA's Director of Statistics, commented: "We can see that the January sales did not encourage borrowing on credit cards.
"As in the second half of last year, card borrowing is contracting and, with weaker retail sales being reported, this reflects the consumer's current attitude to spending and their commitments."
While the fact that consumers are spending less on plastic is a good thing as far as personal finance and debt avoidance is concerned, some financial analysts are concerned that shoppers have simply turned from one form of credit to another.
This estimate would fall in line with the BBA's figures which stated that loans and overdraft expenditure rose by £0.5 billion in the last month, while credit card spending fell by the same amount.
Writing for firstrung.co.uk, John Stepnek noted: "Nowadays, many people have effectively staked their house in order to fund essentially frivolous consumption."
He went on to suggest that while in the past a loan would have only been taken out for something serious, such as a home extension, now consumers were more likely to use a loan to pay for unnecessary items like a two-week holiday.
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