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Credit card debt drops after decade

Fri, 20 May 2005

Credit card debt has dropped for the first time in more than ten years, according to new figures.

Outstanding credit card debt fell by £40 million in April as credit card holders repaid more than what they borrowed. It was the first time since May 1994 that this has happened, the British Bankers' Association (BBA) announced.

The amount consumers saved remained strong for the second consecutive month, with £3.4 million in savings.

David Dooks, BBA director of statistics, said: "This is another indication that the consumer is being more cautious in the light of lower household disposable income. The household belt is tightening."

He added that the figure, which is adjusted seasonally, might have been distorted by the fact that Easter fell in March this year. He noted that April spending would only show on credit card bills in May.

The BBA also reported slow growth in loans and overdrafts, while mortgage lending was weaker as the housing market continued to slow.

The Council of Mortgage Lenders reported a slight rise in total mortgage lending during April, saying it had increased by two per cent to reach £21.5 billion. This figure was 14 per cent lower than it had been during the same month of the previous year.

The British Bankers' Association (BBA) is the leading trade association in the banking and financial services industry representing banks and other financial services firms operating in the UK.

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