Consumers are shying away from borrowing, with only credit card lending holding steady.
Figures from the Finance & Leasing Association (FLA) reveal that credit lending showed no change in April, compared with the same point last year.
It is the High Street that continues to bear the brunt of people's more conservative approach to credit.
Purchases on store cards were down by more than a fifth (21%) and new installment credit taken out in shops was also down by 16%.
Consumers have also become more reluctant to take on unsecured borrowing, with the amount of loans taken falling by 17% compared with the same month last year.
The decline in demand comes at a time when some parts of the credit market are already shrinking and the Government is drawing up plans for further changes to the way credit is regulated.
Car finance also took a dip in the month compared with April 2010, with loans taken declining by 8%
"Consumers are thinking very carefully before taking out credit and this is reflected in the fall in credit spending on the High Street," said Fiona Hoyle, head of consumer finance at the FLA.
"Over the last five years credit providers have introduced extensive new rights for consumer credit customers. Any further regulatory change must not inadvertently impede recovery in the retail sector."
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