Consumers show sign of debt fatigue

Consumers are showing signs of being less keen to take on debt, despite spending a record amount on plastic during December, figures indicated today.

Credit and debit card spending reached £18.6 billion during December, an 8.6% increase on the same month of 2000, according to the Credit Card Research Group (CCRG).

Despite this, the rate at which people's spending on credit cards was increasing rose at its slowest level since 1994 when the group's records began.

While debit card spending rose 11.9% compared to the previous year to account for £9.8 billion of the total, credit card spending crept up just 5.2% year-on-year to £8.8 billion.

The group said the low increase in credit card spending suggested people were beginning to respond to commentators' concerns that they were taking on too much debt.

With 26 million adults now owning a credit card the market may have become saturated, it added.

CCRG director Steve Round said: "The slowdown in growth of credit card spending is a clear sign that consumers have heeded warnings of over-extension and are using their credit facilities in a sensible way.

"Commentators have in the past voiced concern that credit card use was growing too rapidly and that debt was spiralling out of control.

"The slowdown in growth we have seen throughout 2001 suggests that much of the previous growth was a function of increased penetration.

Credit card issuers would have to offer increasingly better deals to tempt consumers away from rivals, he added.

Plastic spending on the high street rose 7.3% to £12.3 billion during December compared to the same period of 2000, accounting for 50% of all payments.

But travel expenditure on credit cards and debit cards was down 4.5% at £891 million as the terrorist attacks of September 11 continued to put people off flying.

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