Fall in household debt no cause for celebration
By UK CreditCards.com
Levels of household debt dropped in December, according to the latest statistics from Credit Action. However, the money education charity claims the figures are not necessarily good news, as they reflect families' concerns about the state of their personal finances.
Debts shrink ahead of Christmas
The festive period is typically a time for spending, with retailers cashing in on families' desire to ensure they have plenty of food, drink and presents. But the latest figures from Credit Action indicate that levels of household debt actually dropped in the weeks leading up to Christmas 2011.
According to the charity's statistics, released in February 2012, the average household debt (excluding mortgages) fell from £7,972 in November 2011 to £7,948 in December -- with the rate of decline accelerating by 50% compared with the previous month. At the same time, the daily amount of interest paid on personal debt fell from £173 million to £171 million, as the nation collectively reduced the cost of its borrowing.
Figures reflect "caution and concern"
At first glance, the figures might seem surprising, given the fact that December is normally a time of high consumer spending. But Michelle Highman, chief executive officer of Credit Action, believes the data reflect a troubling state of affairs.
"Put in context these are striking figures, with the decrease in average household debt not necessarily a cause for celebration," she said.
Instead, the numbers represent an "increased level of caution and concern in your average household," which shows that consumers are not confident enough in their financial security to use credit.
"Whilst it is heartening that people did not overspend, the underlying reasons for not doing so may prove to be a real cause for concern in the coming year," Highman said.See related: Credit card spending fell in 2011; UK consumers being cautious with credit
Published: 9 February 2012
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