Credit card borrowing on the decline, says BBA

People are managing their finances better, says the British Bankers’ Association, or at least, it looks that way. The reason for the BBA’s opinion is the release of recent statistics showing that credit card borrowing is continuing to fall. The figure was down £0.5 billion over the previous period. This is encouraging, says incoming BBA chief executive Angela Knight.

BBA figures from the major British banking groups (including Abbey, Alliance & Leicester, Barclays, Bradford & Bingley, HBOS, HSBC Bank, Lloyds TSB, Northern Rock and The Royal Bank of Scotland) for January 2007 show that total lending to the UK private sector had a net underlying increase of 1.7 per cent to £1,290 billion, the strongest monthly rise in nine months. The rise of £21.9 billion compares with an average rise of £11.8 billion over the previous six months.

At the same time, there was an underlying increase in net mortgage lending. The £5.6 billion increase is similar to the monthly average for the past six months. Unsecured personal lending remained unchanged, while loans and overdrafts increased by £0.5 billion.

David Dooks, BBA director of statistics, said: ‘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.’

Meanwhile mortgage lending remained buoyant as expected. Lending to real estate companies increased slightly, while lending to manufacturers, the wholesale and retail trade and construction fell. Lending to individuals rose by an underlying £5,561 in January. Consumer credit, on the other hand, fell by £13 million overall. Lending to financial firms increased by £12.85 billion in January, while lending to other financial intermediaries rose by £10.32 billion. This reflected lending to investment companies in the financial sector.