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Britons paying down their debts

Britons are becoming savvier with their credit cards as they focus on repaying their debt, figures showed today.

The number of people using their plastic to get cash advances, which incur high interest rates and charges, fell by 18 per cent during the year to the end of October, while the amount of cash people withdraw has also dropped by 21 per cent to £136.

Consumers are also consistently repaying more on their plastic than they spend each month, with people collectively reducing their credit card debt by £281 million during October, according to the British Bankers' Association.

This helped to reduce the amount Britons collectively owe on their plastic to £60.4 billion, the lowest level since August 2004, around 30 per cent of which is debt on which no interest is being charged.

The average amount switched between cards through a balance transfer, usually to take advantage of a 0 per cent interest or low interest rate offer, has also increased by 7 per cent during the past year to £2,200.

Around 162 million purchases were made using credit cards during October, slightly higher than a year earlier in seasonally adjusted terms, but the average value of a purchase fell slightly to £64.

David Dooks, BBA statistics director, said: "The use of cards for purchases is seeing a slow trend increase over time.

"But consumers regularly repay more than they spend, and cards are used much less to withdraw cash than they were a year ago."

Copyright © Press Association 2010

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