Broowers pay off credit card debt

Credit card holders continued to tackle their debts in the run-up to Christmas.

Consumers paid more off their credit cards and personal loans than they spent during November, according to figures from the British Bankers’ Association (BBA). The £6.8bn spent on plastic was offset by £7bn made in repayments, continuing a six-month trend.

The BBA attributed the behaviour to the continued economic instability creating a lack of confidence in consumers when seeking credit for spending or investment.

Personal savings and deposits in high-street banks, including current accounts, went up by £2.1bn to 645.3bn - a change from the decrease seen in October.

The figure for new loans taken out by consumers in new loans remains at £1.2bn, unchanged from a six-month average, leaving £41.7bn outstanding.

Mortgages approved were down from October at £8.4bn, which was lower than the six-month average.

As expected at this time of year, the number of mortgage approvals dropped, but the money paid out for gross mortgage lending continued to rise. The BBA said that capital repayment of mortgages remained high, meaning that net mortgage lending increased by only £300m compared with £800m in October.

Chris Broome, a financial adviser with Broome Financial Planning, said: “With interest rates so low, and the returns on deposit accounts negative in real terms, it’s inevitable that people will use their money to pay down debt. And in many cases, this will be the right thing to do.”

He added: “We have more evidence of the growth of buy-to-let, which is one of the few sectors showing any resilience.

“But the fact that buy-to-let is growing says all you need to know about the shape of the owner-occupier market in the short to medium term.”