Debt Free News

Credit card debt declining in UK

January 25, 2007

In debt free news today, it is being reported in the UK that consumers are using their credit cards less. In fact, for the first time in well over a decade credit card debt is declining. However, it is also being reported that UK consumers are instead turning to mortgage refinancing and other types of debt consolidation loans like home equity lines of credit to pay for everyday expenses or to pay of credit card debt.

While Americans are struggling with a decline in home equity due to a real estate slow down, UK home prices seem to be rising – and that is where the non use of credit cards comes in for UK residents who own homes.

The report released today states that for the first time in fourteen years, consumers in the UK borrowed less on credit cards. This statistic covers the year 2006.

In fact, credit card lending was reduced by an amazing £1.8 billion in 2006. This is actually the first time it has slowed since the UK started tallying this static some fourteen years ago.

This is a good sign fro residents in the UK as it suggests they are looking to lower interest rated loans to pay for expenses. While this report does not suggest consumers are not acquiring more debt, it states that consumers are getting better at using their clout for lower rated situations for interest.

Now, if we could just get this same situation in the US. Paying of credit card debt with lower rated loans – home equity would be nice.

So, as far as mortgage lending to pay of high rated debts such as credit cards, UK homeowners are cashing in on their equity to the tune of £66.8 billion in 2006. Home equity lending in the UK rose an impressive twenty percent in 2006 over the rate from 2005 that was reported last year at this time.

What we are seeing in our debt free news department is that loans and overdraft borrowing in the UK additionally rose by a rather large figure of £4.2 billion. This figure reflects a fifteen percent decrease even though it is a large figure it is fifteen percent lower than the year before notably.

Why the cut back on credit card spending? The answer is quite simple. UK consumers were feeling the pressure, after a series of interest rate hikes there. UK residents additionally suffered from increases in utility rates and the cost of fuel. Transportation also gained in cost during 2006.

Even though the cost of living is on the rise – as it is most everywhere in the world – it is nice to see that the people in the UK are taking a close look at how they spend. This will surely affect credit card rates in the future if this trend continues.

Instead of depending on the convenience of using plastic, consumers are turning away from their credit cards and even persona loans that come with high rates of interest for the lower pay back cost of mortgage lending.

Another reason consumers have steered away in droves from using plastic is that there were no real good offers either. The rate of zero interest credit cards were not seen at the same level they were in even 2005.

While debt free living may not be getting better fro many, at least they are talking notice of credit card debt and doing something about it. After all, smart financial planning has a lot to do with how you spend your money and the rates you pay to borrow.

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