New figures from the Bank of England show a jump in credit card spending, with the three months before Christmas seeing the highest levels of spending for that period since 2007.
The rise was attributed to greater competition, better products, and a greater willingness on behalf of lenders to issue cards to those with lower credit scores.
There was also a significant growth in the field of personal loans.
Surge in borrowing
The growth in credit card lending has coincided with an extremely competitive market and some of the longest purchase and balance transfer deals ever seen.
Balance transfers – With the launch of the 35-month 0% balance transfer card Barclaycard now has the longest ever balance transfer period, allowing you to pay 0% for almost three years.
0% purchases – The most popular category for spending has been rocked by Santander’s 23 month 0% on purchases card, also offering 23 months 0% on balance transfers and cashback rewards.
Bad credit – The surge in credit card spending has also seen a reduction in credit scoring criteria. The Aqua Classic card is open to those with CCJs or defaults and offers free access to credit reports.
While a more competitive market has helped stimulate growth the boom has also been attributed to lender’s lowering the minimum acceptance criteria of those applying for credit.
The Bank of England’s report shows that ‘credit scoring criteria loosened and the proportion of applications being approved increased’.
This is in part down to a drop in default rates, which fell significantly in the final third of last year.