Year-on-year decline in credit card balances

by Gill Montia

Story link: Year-on-year decline in credit card balances

January saw a 17% seasonal rise in the UK consumer’s average outstanding credit card balance.

According to figures compiled by financial website, Moneyextra, the average credit card balance for the month stood at £2,168, up from £1,842 in December 2007.

However, the downward trend in the balance continues, as the January 2008 figure is 25% less than the average balance of £2,901 in January 2007 and 36% less than the average outstanding balance of £3,411, in January 2005.

Robin Amlot of Moneyextra.com comments: “There is a clear trend of falling outstanding credit card balances over the course of the last three years. The question is whether this actually reflects consumers clearing debts or merely a rescheduling of them.”

Adding: “It’s far less easy now for so-called rate tarts to continue to hop from one credit card deal to another but what we are witnessing is a rise in other forms of borrowing, notably secured lending … this means they will have been able to reduce their monthly outgoings but potentially at the expense of a much larger interest rate bill over the whole course of the loan repayment.”