Credit card repayments fall to 2-year low
Credit card holders in the UK are paying less off their balance than at any point during the last two years, which isn’t surprising given the current pressure on household incomes from deteriorating employment conditions and record high levels of inflation.
The trend was noticed among ‘classic’ card accounts taken out within the last five years rather than student cards, premium cards and cards issued in Ireland which were excluded from the data.
The latest figures from the FICO Benchmark Reporting Service also revealed that the number of classic cardholders using credit cards for cash withdrawal is at the highest level for the last two years.
The average credit limit on classic cards continued to decline according to the report and have now fallen 4.3 percent since March.
Mike Gordon, FICO’s vice president, said: “The combination of flat spending on classic cards with lower payment percentages and higher cash usage indicates increasing strain on consumers’ wallets.
“While one month is not enough to call a trend, we are monitoring these and other patterns closely to help our clients manage their card portfolios and understand changes in the UK consumer’s financial health.”
Halifax has today launched a credit card designed to help consumers spread the cost of shopping and debt consolidation.
The bank’s latest ‘All in One’ offers 15-months interest-free credit for both balance transfers and new purchases, which could attract shoppers who want to spread the cost of Christmas.
However, there is a balance transfer fee of 3 per cent of the value of the debts transferred and the card is not available to customers who already have a Halifax card.
The Halifax All In One Credit Card offers a typical APR of 17.9 per cent, so shoppers need to ensure they pay off their balance before the promotional rate expires.