Credit card cutbacks as debtors take budgets in hand

21/04/2009

Many consumers are trying to put stronger limits on their spending by cancelling some of their credit cards.

Callcredit, a financial data service, said that people are beginning to end their "borrow now, pay later" spending habits - which saw them build up debts through high-interest cards and loans.

The report said that 53 per cent of people are paying more attention to their spending now, than they did six months ago.

What's more, one in five said that they were currently planning to reduce the number of credit cards they own - although almost a third admit to keeping three to six cards at the moment.

Kevin Still, EuroDebt director, said: "I think many consumers have grown wise to accepting welcome offers from high street store branded credit cards with an introductory discount and very high annual percentage rates. Use of credit is becoming more controlled and there is a desire to reduce credit commitments where this is feasible."

He added: "For many that are highly indebted then this may not be so straightforward and careful consideration should be given to which cards to pay off first and to ensure that contractual commitments are met wherever possible. Some credit granters are much more aggressive in their collection strategies and it is worth reading the terms and penalties in the event of contractual terms being broken."

Caroline Worboys, managing director of Callcredit Information Group Marketing Solutions, commented: "The 'borrow now, pay later' bubble has burst and it means that companies need to work even harder to get consumers to part with their hard-earned cash."

Latest spending figures from clearing association Apacs show that almost £95 billion was spent on plastic cards in the UK over the last three months of 2008.

Tags; Debt Management and Banking, Credit Card Lifestyle,

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