The number of consumers taking out and using credit cards is declining. However, borrowing is fast being replaced by payday loans that are easier to obtain.
According to the latest research from PricewaterhouseCoopers (PwC), people within the UK paid off some of their unsecured debts in 2011, but they were still left with financial problems.
Credit cards are not the preferred option as people are turning to payday loans as a faster alternative to obtaining cash fast.
The report found that credit cards are ‘feeling the strain’ as consumers need to rely on other means of gaining money faster. The PwC found that the number of credit cards in circulation and the total amount borrowed on them over the last 12 months has fallen, suggesting that UK consumers were turning to other forms of payment. Despite this, the average credit card balance was at around £1,000.
Simon Westcott, Director of PwC’s Financial Services practice, commented: “UK consumers are among the most indebted in the world, with the average UK household still saddled with nearly £8,000 of unsecured debt. Although the UK Government’s austerity drive appears to be hitting home, with households paying off an average of £355 worth of their debt in 2011, three years of austerity by UK consumers has only made a small dent in the total levels of borrowing.”
The total outstanding credit fell by 5% last year, declining at a faster rate than the previous year.
“45 years since it was first introduced, the credit card is suffering a midlife crisis. Consumers discarded nearly one million cards in 2011, taking the number of credit cards in circulation down to levels not seen for almost a decade,” continued Mr Westcott
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