Brits 'paying off card debt' as job loss fears rise

06/03/2009

Gloomy British shoppers are to avoid spending big on the high street, with the economic downturn worsening and job loss fears on the increase.

The latest MoneyMood Survey from insurers Legal & General (L&G) shows that less than one in four consumers now feel "in the mood to spend", as the economy tips into recession.

This is 20 per cent down on 2005, when Britain was still enjoying economic growth.

L&G also found that 21 per cent were now putting money aside to pay off the credit card debt built up during Christmas.

EuroDebt director Kevin Still said: "It is encouraging that more people are looking to budget more for planned expenditure in the future, like Christmas, and to build up a buffer in the event of changes in circumstances where there may be a loss of income.

"I believe some of this has been stimulated by the credit card companies themselves increasing their retail purchase rates to very high levels, with some APRs increasing to mid-twenties from an industry average of just over 17 per cent APR. Consumers find it difficult to reconcile these type of rate increases when the Bank of England has reduced base rate to 0.5 per cent."

L&G's survey showed that 29 per cent are currently saving rather than spending because they are worried about losing their job.

Official figures showed recently that unemployment has spiked to 1.97 million, the highest in a decade, due to the credit crunch and the recession.

Tags; Debt Management and Banking, Credit Card Lifestyle,

• Share
• 
• 
• Store
• 
• Follow
•