Credit card spending drops as bad debts expected to rise

12 December 2008

Consumers are spending less on credit cards and are expected to cut back further next year, a chief executive in the credit card industry has said.

Speaking to Reuters, Barclaycard chief executive Antony Jenkins said he expects to see an increase in bad debts as employment levels fall and the state of the economy worsens.

Between them, Britain’s Barclaycard holders (who number almost 12 million) are now spending 3-4% less than they were a year ago – and this decline is expected to be more noticeable in 2009.

“Our expectation is people will spend quite a lot less on their credit cards next year,” Mr Jenkins said.

The lender has seen an increase in missed payments in recent weeks, and this is also expected to increase: “There’s no doubt in our minds that next year we’ll see increased delinquency and an increase in the numbers of customers in financial difficulty, with the consequent impact on impairment.”

According to Bank of England figures, British consumers are carrying a total of £235 billion of consumer debt (credit card lending, unsecured loans, etc.).

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