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January 31, 2014

Credit card debt drops despite increase in spending: UK Cards Association

The credit card debt in the UK has fallen by 13% despite 20% or £26bn rise in spending in the last five years, according to data by the UK Cards Association.

By Verdict Staff

The credit card debt in the UK has fallen by 13% despite 20% or £26bn rise in spending in the last five years, according to data by the UK Cards Association.

Outstanding balances on all credit cards in the UK have fallen by £8.9bn, down from £65.8bn in 2008 to £56.9bn by December 2013, as customers started using their cards more wisely.

Additionally, the proportion of credit card balances bearing interest fell down from 81% in 2002 to 60% in 2013. The decrease was primarily due to customers’ increased use of cards to pay their bills and increased use of zero percent interest deals.

The UK Cards Association policy head, Richard Koch, said they have seen a steady decline in the level of debt across the credit card market in recent years.

"Consumers are now using the interest free periods that credit cards offer and then paying off their balances faster.

"To help people manage their borrowing and get the most out of their cards, more information has been put into their hands, such as through the introduction of annual credit card statements," Koch added.

According to the association, the present level of credit card debt represents just 4% of the UK’s total personal borrowing.

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