Consumers cut back on credit card spending
Meanwhile, delinquencies are up
By UK CreditCards.com
Many borrowers have changed their financial habits and cut their credit card use in the economic downturn, a report from PricewaterhouseCoopers (PwC) suggested.
The accountancy firm said that overall borrowing fell by 3% in 2009, with the number of cards in circulation also declining by 8%.
Job insecurity could be a crucial factor behind this trend, with unemployment reaching a 14-year high on latest official figures. Almost one in three (28%) of poll respondents told PwC that they expected a pay freeze or reduction over the next year.
The report also predicted that overall credit card write-offs, caused by consumers no longer being able to pay off their debts, would rise from 3.8% to as much as 9% in 2010.
"Consumers are going to be faced with the unhappy prospect of a marked reduction in the availability of credit, a reduction in choice of products and an overall increase in charges with both increased interest rates and an expansion of annual and other fees," PwC added.
The new analysis is supported by the latest Credit Conditions report from the Bank of England, which predicted that the credit card market would tighten further over the final three months of the year.
Published: 9 November 2009
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