Credit cards Updated:
The past 12 months have been the tipping point for the willingness of consumers to take on more debt, with the level of unsecured lending reaching a plateau.
A report into consumer credit in the UK by PricewaterhouseCoopers (PwC) has found that '2009 has been a watershed year for consumer credit in the UK, with both lenders and consumers reassessing the balance sheets.'
Total household lending stagnated at around £1.5 trillion, while unsecured lending remained constant at approximately £230 million. It marks a change in trends from 2008, when unsecured lending recorded a rise of eight per cent.
The PwC says the last year has seen a cooling passion for credit cards,with borrowing down to £64 billion – a fall of three per cent. The number of credit cards has fallen by eight per cent during the period, it added.
However, this downturn has also been partly caused by stricter approaches that have been adopted by credit card firms.
"The recent announcement by one major issuer that they would not generally seek to acquire new credit card customers without those same customers also holding a current account with them is in stark contrast to the time when credit card issuers accounted for one in every four pieces of junk mail that made it through our letterboxes," PwC commented.
The firm also reported that card companies wrote off some £3.2 billion in bad debts, marking a historic high. The situation could get worse, however, with PwC predicting that bad debts could make up nine per cent of outstanding balances by the end of 2010. Currently, the figure is six per cent.
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