Last-minute Christmas shopping nets £240 million on gifts

The UK credit card industry has reported that the last minute shopping on Christmas Eve saw around £240 million spent on gifts.

This was revealed as the British Bankers Association (BBA) said that the Brits are turning away from taking out personal loans and instead are using credit cards for their purchases. The BBA said figure has shown that unsecured debt in the UK fell in the past 12 months.

While borrowing to buy homes reached its highest level in two years last month, the value of new personal loans in November stood at £1.1bn, a fall of 43.7 percent compared with the same month last year, according to the BBA.

Brits rushed to buy gifts on Christmas Eve using their credit cards despite the fact that credit card rates have significantly jumped since the beginning of this year. The buying behaviour of Brits using  their credit cards indicate their willingness to pile upon debt using flexible terms offered by credit cards.

Credit card providers said UK consumers are willing and happy to pile up debt beyond manageable levels to buy Christmas gifts in the run-up to the festive period and then worry on paying it back in the New Year.

Experts believe more Brits will be facing credit problems in the coming year as the UK job market is still under pressure, the economy not yet out of recession and inflations is starting to rear its head again.

Economists predict that bankruptcies in the UK would continue to rise in the next 18 months and reach new levels, but the public seems to be ignoring such threat with the assumption that the local economy would improve as economies in other parts of the world recover.

However, the UK economy has been badly hit by the credit crunch and financial analysts believe it would take some time for it to fully recover.

Meanwhile, the BBA said that spending on credit cards fell over the past 12 months as consumers concentrate on paying back what they have borrowed. Repayments on credit cards outstripped spending in November, as cardholders paid back £5.9bn and borrowed £5.8bn on plastic. Over the previous six months an average of £6bn was repaid on credit cards, while average spending over the same period was £5.7bn.