CONSUMERS are repaying credit card balances more than they are borrowing on plastic, with many Brits “simply going without” new goods instead of adding to their debts.
While £7.2bn was bought on credit cards in October, £7.4bn was repaid, according to data released yesterday by the British Banking Association (BBA).
Across six months to October an average of around £100m was repaid onto plastic per month, the BBA said.
The findings chimed with a separate survey, conducted by the Bank of England, which said that consumer spending has “remained very weak”.
“Contacts reported that households were budgeting ever more keenly, trading down to avoid overspending, or simply going without, and increasingly deferring expenditure on durable goods until replacement became unavoidable,” the survey said.
Christmas sales are expected to be “broadly flat compared to last year”, the Bank’s respondents said. “There were rising concerns about future failures in the sector, if demand fell short of even these modest expectations,” the report warned.
“We expect credit creation to continue its weak trend over the near term,” Barclays Capital said in a note.
People are choosing to store away their cash, the BBA data showed, with personal deposits rising by £900m.
Bank lending to businesses also dropped in October, according to the figures. Lending to non-financial companies was down by around £700m – slightly below the six month trend for a monthly fall of £900m.