Friday, March 5, 2010
Category:
Finance News
According to the Finance & Leasing Association, consumers spent 17 percent more on instalment credit during the lead up to Christmas compared to the same period a year before.
It is believed that a proportion of this increase was related to the rate of VAT returning to 17.5 percent, which reportedly prompted people to make money-saving purchases beforehand.
Compared to 2008, it has been revealed that the sum of new consumer lending provided by members of the FLA fell by 15 percent in 2009. However, an analysis of the actual products has shown that credit card, store card and store instalment credit spending have ‘held up, relative to longer-term credit products’. It was found that consumers are making smaller purchases on instalment credit, such as white goods and home electronics, which typically cost up to £700.
Fiona Hoyle, the FLA's Head of Consumer Finance, said: "Our figures tell a wider story of the recession. Overall, new consumer lending is down by 15%. But the breakdown between different credit products tells us that customers are looking at the financial products available to them, and using credit products to meet specific needs.
"The High Street has benefited from FLA members providing credit to customers, whether through credit cards, store cards or store instalment credit. Customers are using these products because they are flexible and allow consumers to spread payments for essential goods and keep them at levels that are within their budgets.
"The same principle applies to store cards. But store cards are endangered by current proposals from the Conservatives, which would gold-plate new EU regulations and remove this convenient option for customers. We hope the Conservatives will think again."
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Homeowners who find themselves with multiple credit card or store card repayments each month could consider taking out a secured loan to tie these commitments up into one manageable monthly repayment. One of many finance options available, a secured loan for
consolidation could leave borrowers with just one monthly repayment as opposed to juggling several. Furthermore, this single monthly repayment could even be lower than the sum of current outgoings. However, if opting for a secured loan to consolidate existing credit, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
