Consumers prefer mortgages to credit cards

People in Britain are choosing mortgages over credit cards as a form of borrowing, the British Bankers’ Association has suggested.

Mortgage lending in the form of both remortgages and new mortgages grew in January by £5.6 billion, following a similar rise in December.

In contrast, there was a £0.5 million drop in the level of credit card borrowing, although other forms of unsecured borrowing remained steady.

David Dooks, BBA director of statistics, said: “As in the second half of last year, card borrowing is contractingÖthis reflects the consumer’s current attitude to spending and their commitments”.

Credit card borrowing may be seen as becoming more expensive by consumers because many providers have recently raised their interest rates.

This followed a directive from the Office of fair Trading that penalty charges were too high at an average of £25 and should be cut to no more than £12.

© Adfero Ltd

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