Debt-wary consumers repaying on cards

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Consumers paid off more on their credit cards than they spent last month as nervous households concentrated on shoring up their finances, said the British Bankers’ Association (BBA).

High street banking figures for November showed that despite the run-up to Christmas, £6.8bn in new spending on plastic was offset by £7bn made in repayments. This continued a trend seen over the last six months of the year.

The BBA said until there were clear signs of improvement in the economy and stability on the international front, households and businesses lacked the confidence to seek credit for spending or investment.

The value of personal savings and deposits in high street banks, including current accounts, went up by £2.1bn last month, to create a total balance of £645.3bn, reversing an erosion seen in October when the balance went down.

The amount of money taken out by consumers in new loans remained flat, standing at £1.2bn in November, unchanged from a six-month average, leaving £41.7bn outstanding.

Mortgages valued at £8.4bn were approved in November, down from October and lower than the six-month average.

The number of mortgage approvals stood at 72,376 in November, also dropping off from October as the seasonal slowdown took hold.

But the money paid out for gross mortgage lending, including mortgages which have already been approved, showed a month-on-month rise to £8.2bn in November.

The November figure was five per cent higher than the same time last year, but the BBA said capital repayment of mortgages has remained high, meaning that net mortgage lending increased by only £300m in November, compared with £800m in October.

Home owners, faced with a low return on savings, have been reducing the amount they owe.