CREDIT CARDS

Lending to consumers increased by £1 billion in September

The latest ‘Bank of England Trends in Lending’ report found that total lending to individuals rose by £1 billion last month. Many UK households struggling to cope with the rising cost of living may have turned to credit cards and loans for financial help.

Credit card lending increased by £0.2 billion in September, and other loans increased by £0.5 billion for the same period.

Consumer credit rose by £0.6 billion in September, which was higher than the previous six month average increase of £0.5 billion.

Over the last 12 months, the growth rate of increased by 0.2 percentage points to 2.5%, which is the highest level since May 2009.

The research also found that the effective rates on credit cards fell overall, but the rates on new personal loans increased slightly in the three months up to August.

The availability of new secured credit to households increased slightly and the demand for secured lending for house purchasing also increased.

The number of loan approvals for house buying decreased in September, but was higher than the previous sex month average. The number of approvals for remortgaging increased in September and was higher than the previous six-month average.

Fall in consumer confidence

Despite this, retail sales have fallen sharply and consumer spending is slowing down. According to the Confederation of British Industry (CBI) Monthly Distributive Traders Survey,  British consumers have not been using their credit cards as much in the three months up to August.

However, in the run up to Christmas, the CBI predicts that sales volumes will increase by 4%.

Ian McCafferty, CBI Chief Economic Adviser, said; "High street sales remain difficult but the decline has stabilised, and retailers expect there to be some very modest growth next month in the build-up to Christmas.”

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