Consumers 'control spending' with in-store credit

22/07/2009

Consumers are turning to in-store credit as they shy away from other types of lending, new figures from the Finance & Leasing Association (FLA) have revealed.

The store instalment market recorded an eight per cent increase in new business during the last three months, in contrast to all other types of lending which decreased.

Total consumer credit supplied by FLA members dropped by 18 per cent in May when compared with the same month in 2008.

FLA head of research and chief economist, Geraldine Kilkelly, said that the lack of liquidity in the banking sector was continuing to hit lending, with access to wholesale funding remaining "a problem".

She added: "With lower average earnings growth and a higher risk of unemployment, consumers are thinking carefully before taking on further credit commitments.

"Store instalment credit allows customers to borrow in a very controlled way for a particular purchase, with repayments being easily planned within their household budget."

Kevin Still, EuroDebt director, commented: "In store credit can be expensive with high APRs. It is important that payments are properly budgeted for and length of the repayment plan is sensible."

Tags; Debt Management and Banking,

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