Thursday, Feb 14, 2008
Retail figures down over Xmas yet credit card debt now rising to cover household expenditure
Times: Credit card spend sounds credit crunch alarm
Consumers spent a record sum on credit and debit cards in the final three months of last year as borrowers increasingly used plastic to pay their household expenses. Credit and debit card spending rose to £91.5 billion, up from £86.6 billion in the three months to last September. The Association of Payment Clearing Services (Apacs), the body that represents lenders and credit card companies, says that £32.4 billion was spent on credit cards between October and December last year, the second-highest sum in history. "Retail figures were down over Christmas, yet credit card debt is still rising. "This indicates that we are seeing people shifting spending on to credit cards as household expenses mount up.
Posted by jack c @ 09:37 PM (370 views) Add Comment
3 Comments
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1. enuii said...
Would be interesting to find a further breakdown of these figures.
I would expect to see a rise in expensive but essential everyday purchases such as petrol/diesel being pushed onto credit cards as money/credit dries up and debts mount.
Are there any signs of such trends out there yet?
2. Feckinusername said...
Reminds me of the end scene of the film Scarface for some reason.
3. stillthinking said...
When you max on your credit card as a mortgage holder you go into arrears. credit limit reached->house repossessed. I wouldn't be surprised if there are a few more of those articles in the paper about unfair sudden repossession after only a couple of missed payments. Perversely, the banks accelerate their own losses while house prices are still near the peak as they want to sell quick, causing a more rapid decline in their recovery rates.
If NR gets nationalised it will be interesting to see how they handle the repossession aspect of banking. If they attempt to soften their stance and become "more supportive", allowing missed payments, -everybody- will miss payments. The banks seem to have some influence in the press from the number of dire warnings about the consequences of missing a single payment you can read recently.
It is amazing that once the tide has turned pretty much everything you can think of adds self-reinforcing downwards pressure on house prices. Maybe one day we will be reading about a n average daily drop in value, already there are some monthly drop values.
The social expectation of my workplace, as a small sample, is that prices will hold stable (changed from always up), and conversations about housing tend to be more about bragging rights on ease of remortgaging because of the amount of equity already held.