APACS survey suggests credit card users are sensible

Credit card users are handling their debts much more sensibly than implied by recent scare stories according to the Association for Payment Clearing Services (Apacs).

Figures for the second quarter of 2004 reveal that, of the £30.75bn borrowed over the three months, 96 per cent (?29.4bn) had been paid off by the end of the period. This figure is higher than repayment rate of 94 per cent for the equivalent period last year.

Consumer spending hit the headlines recently when the Bank of England revealed that total borrowing - including mortgages, personal loans and credit cards - had broken through the £1trillion barrier for the first time.

But these figures gave a misleading impression of credit card debt, said Sandra Quinn of Apacs. The quarterly figures proved that credit card borrowing was not spiralling out of control, as many pundits believed, she added.

Credit card borrowing represented only a small proportion of total borrowing and the vast majority of cardholders were in control of their finances.

More than half repaid their balances in full each month. These people borrowed much more than those who did not repay immediately.

Credit card repayments accounted for 1.2 per cent of household income. This compared with 17.2 per cent for mortgages and 7 per cent for unsecured lending. "Levels of repayments almost match the amount being borrowed," Quinn added.

"If repayment levels had fallen to 85 per cent, there would be cause for concern. But there's been no such fall. It's true that overall borrowing continues to rise, but repayments are keeping pace, proving that most customers are using cards sensibly."