Consumer credit borrowing dips

30th July 2024

Latest Bank of England data shows that the annual growth rate for consumer credit, including credit cards, personal loans and overdrafts, dipped to 8% in June from 8.4% in May.

The annual growth rate for credit card borrowing fell to 10.5%, from 10.8% in May. Net consumer credit borrowing dipped slightly in June to £1.2 billion, from £1.5 billion in May.

Within this, net borrowing through credit cards fell slightly to £0.5 billion in June from £0.6 billion in May, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also decreased, to £0.7 billion from £0.9 billion over the same period.

Richard Lane, Chief Client Officer at StepChange Debt Charity said “We’ve seen promising commitments from the new government to address financial insecurity among households – but we’re yet to see firmed-up details of what this will involve. A long-term strategy that looks at the affordability of essential bills and financial resilience is necessary to really curb reliance on credit to make ends meet.”

Tom Cuppello, Director, Risk at Broadstone, said “The consumer credit market remains more uncertain with borrowing ticking down again in June. While inflation has been rapidly reducing this year, prices are still rising and we have seen a significant increase in the cost of goods and services over the past two years.

“It is a positive that we are seeing consumers exercise caution in their use of credit to finance spending. It also backs up recent ONS figures on the nation’s households’ finances which showed a reluctance to spend in the uncertain economic climate. As we move to a more stable environment, we may see consumers loosen the purse strings and consumer credit borrowing rise again.”