Borrowing rises at record rates

Unsecured lending to consumers rose at a record rate during February to reach ?80.9bn, figures showed today.

The British Bankers' Association said credit card, overdraft and loan borrowing by individuals increased by ?1.1bn last month.

But the group put the surge down to financially savvy consumers making the most of low introductory interest rate offers on credit cards to transfer their balances and make their debt cheaper to manage. It added that there was also stronger demand for personal car loans ahead of the new registration. BBA chief executive Ian Mullen said: "February's data showed that credit cards, apart from day-to-day spending, can provide cheaper debt finance for consumers through balance transfer offers, while structured personal loans, one of the mainstays of personal retail banking, are preferred for big-ticket items.

"As consumers seek to minimise borrowing costs, they are taking advantage of the range of options available."

Spending on credit cards totalled ?5.33bn in February, nearly 14% higher than the same month in 2000, though this was 8% less than the recent average.

But lower repayments led to borrowing on plastic rising by ?352m, more than double January's jump of ?144m, though balance transfers are thought to have accounted for about a third of this increase.

Lending through personal loans and overdrafts rose by ?763m, exceeding the recent monthly average of ?700m.