Britain's love affair with the credit card appears to be waning

Official figures from the Bank of England have revealed that more money was repaid than borrowed on credit cards in August, the last time this happenend was in May 1994 when Britain was emerging from a deep financial recession.

There was a fall of £311m in credit card borrowing in August which was the biggest drop since records began in 1993.

The figures have confirmed what the major British banks have been saying, in that they have noticed a trend towards card repayment in recent months.

Sandra Quinn of the Association of Payment Clearing Services (APACS) said: "What this shows is that customers are realising they must be responsible and pay off their credit card debt." She expects the trend for net repayments to continue and believes people are reaching for their debit cards in their wallets rather than their credit cards.

Economic experts believe the fall in credit card lending may have been triggered by a combination of higher interest rates and higher credit card fees.

The news has been welcomed by those worried about the massive growth in consumer debt, with personal insolvencies running at record levels. It emerged earlier this week that British consumers hold one third of all the unsecured consumer debt in Europe. Research from independent market analysts Datamonitor found that the UK consumer credit market hit £215 billion in 2005, making it the most indebted country in Western Europe. The average person owes just over £3,000, which is almost twice as much as his continental cousin.


Peter Tutton, spokesman for Citizens Advice commented "If the decrease is due to people recognising the need to pay off more than just the interest each month, that is certainly a positive step."