PricewaterhouseCoopers (PwC) says their Consumer Credit Confidence Survey revealed that UK credit card holders expended 97 billion GBF last year - the lowest in six years. The number of credit cards issued also dropped by 1.5 million to 60 million, which represents an all-time 7-year low. In addition, the report revealed that personal borrowing has also plummeted by 500 GBF per UK household. It is expected to plunge about two per cent more as consumers continue to fulfil loan requirements and find that bank approval is harder to obtain.
While personal borrowing has dropped, the PwC report also shows that amounts borrowed remain high at 8,000 GBF per UK household. In addition, borrowing rates are expected to increase by as much as three per cent in the next four years. Consumers, though, are generally being more cautious with respect to their personal budget as prices for everyday purchases continue to escalate.
Overall, the news suggests that the reported changes could have a significant effect economically, which could also hinder sales in the retail sector and slow commercial growth overall. In addition, potential borrowers do not have the same confidence they once had with respect to managing their finances. Therefore, financial institutions are much more careful about approving loans.
The research by PwC also reveals that younger people, or those in the 18-to-24 year age bracket, tend to save more money over those individuals who are older (45+ years of age).
According to Richard Thompson, one of the partners at PricewaterCoopers, the data suggests “. . . that the type of credit demanded by consumers is changing.” He indicated that consumers are tending to make borrowing decisions that include financial products, such as payday loans and home credit lending companies. In addition, Thompson believes that more regulation along these lines is highly probable. Such borrowing options are marked as concerns in the PwC findings, all which are the result of the banks’ refusal to deal with anyone with less-than-perfect credit.