The figures released by the Bank of England, revealed a net drop of £147 million during July, pointing to a trend for shoppers to rein in their spending and concentrate on repaying debts on plastic.
The numbers represent the biggest fall in net credit card borrowing in six years and demonstrate a culture of consumers preferring to pay off what they owe, rather than continuing to rely on credit.
The total outstanding credit card debt in the UK tumbled to £54,585 million, a drop of £316 million, despite the amount borrowed on credit cards during the month remaining relatively unchanged, up by just £7 million. This would seem to suggest that an increasing number of people are opting to try and shrink their credit card bills.
A decline was not expected, as the figure has been steadily reducing over the last two years, dropping from £59,111 during August 2010, to £54,585 during July 2012. But even though experts had predicted outstanding debt would continue to fall, the rate of decline was particularly sharp during July.
However, some critics have questioned whether the overall levels of debt are simply due to an increased number of debts being written off by lenders. Earlier in the year, the Bank of England confirmed that as much as £6 million is written off every day.
The other explanation may be that consumers have switched to alternative methods of borrowing, such as personal loans or overdrafts. The total amount of borrowing climbed during July 2012 to £3,820 million, markedly higher than the £3,073 million borrowed in July 2011.