Debt Fears Grow

It seems that the amount of debt that we have, is starting to take effect with higher interest rates starting to bite the pocket of the consumer.

Credit card debt fell, yes fell for the first time in over a decade last month, to the tune of £40 million, with the British consumer seemingly trying to reduce the amount of debt that they have, rather than adding to it. But it still leaves a massive £33.9 billion owing to credit cards, by the consumer.

David Dooks the director of the British Bankers Association has put the fall in credit card debt down to the worry of the people of the state of the economy, which then leads on to the worry about the effects on employment, are now trying to save rather than spend encase of any eventuality.

Recent events such as the recent closure of the Rover car manufacturers, has had an adverse reaction on the consumer, who may now feel the time is now to reduce the amount of debt that they have. Either that or it could be down to people trying to pay of their Christmas debts to pay for the up and coming summer holidays abroad.

A lot of factors have been noticed in the sudden turn in the ways of consumer spending, the average transactions each month have seen a 5.2% drop to under an average of 10 a month and Debit cards have seen a larger upturn in fortunes, with the issue of 17.5% more Debit cards and an issue of only 3% more credit cards.

With credit still enjoying a growth rate of 10% each year, a growth in bankruptcies is almost inevitable and the figures of people falling through this trap door has risen quite considerably in the last few months and record bad loans being written off by the banks were seen, since the records began in 1993.

With consumer spending a big factor in the economy and the welfare of jobs, the recent fall in spending could have an effect mostly on the high street and some retailers are already seeing a drop in profits, from this time last year, as consumers prepare to tighten their belts in anticipation of a fall in the economy.