Unsecured lending dropped by nearly 38 per cent in December compared to a year earlier, it has been found.
British Bankers' Association (BBA) figures for the final month of 2008 showed that new unsecured loans totalled £1.7 billion.
And with that figure £200 million below November's, the total amount outstanding is now £64.4 billion.
A similar decline was seen for net lending on credit cards, as consumers were found to be spending less through such forms of finance.
Statistics director at the BBA David Dooks remarked: "Consumer credit was very weak in December as people reined in their credit card spending, despite early sales and heavy discounting by retailers," following findings that the annual growth rate had slowed from 7.9 per cent to seven per cent.
Last week Moneyfacts.co.uk revealed that interest rates on some unsecured loans have risen by more than three per cent over the last 18 months.
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