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What is the average credit card debt in the UK?

Recent figures show that Brits owe almost one and a half trillion pounds in personal debt. Credit Action reports that outstanding personal debt stood at 1.46 trillion pounds in May 2012, nearly as much as the whole country produced in 2011.

While much of this borrowing is on mortgages and personal loans, the UK also has a giant combined credit card balance. In our guide, we look at the average credit card debt in the UK and some trends in personal debt.

Average credit card debt in UK is £2,266

In January 2012, the Guardian reported that credit card debt is the biggest source of unsecured debt in the UK. Insurance giant Aviva’s Family Finances report in summer 2012 found that the average credit card debt in the UK was £2,266.

Credit Action figures from the end of March 2012 showed that credit card debts in the UK totalled £55.3 billion. This represents around a quarter of the total £208 billion that Brits owe on credit cards, store cards personal loans and overdrafts.

If you want to keep in control of your debts it is vital that you know what your credit card balance is. Recent research from credit reference agency Equifax found that one-third of people in Britain who don't clear their credit card debt each month have no idea what the outstanding balance is on their account. Over half of people questioned did not know what interest rate they were being charged.

Always check your credit card statement and make sure you can make at least your minimum card payment every month.

Credit cards only a part of Brits’ debts

While the average credit card balance may be around £2,300, British families are nearly £8,000 in debt from loans, overdrafts and credit cards according to research from PricewaterhouseCoopers.

However, it seems that British households are determined to repay their credit card debt. PwC’s research found that each household paid off an average of around £355 of their unsecured debt in 2011 while the report also suggests that credit card use could fall into permanent decline, with the rise of payday lenders changing how people access credit.

PwC's Precious Plastic report predicted UK consumers will continue their determination to pay down their debts, owing around £7,500 by 2013.

The average UK credit card debt is falling

The PwC report said that credit card borrowing fell by 5 per cent in 2011. Meanwhile, debit cards grew by 10 per cent to become used more frequently than cash in payments for the first time.

Simon Westcott, director in PwC’s financial services practice, said: “Forty-five years since it was first introduced, the credit card is suffering a mid-life crisis.

“Consumers discarded nearly one million cards in 2011, taking the number of credit cards in circulation down to levels not seen for almost a decade.

“The longer term trend suggests that numbers will continue to decline, with the younger generation showing a preference for debit cards and emerging digital alternatives such as mobile payments.”

Michelle Highman, CEO of Credit Action says: "Whilst unsecured debt continues to be erratic, we have seen a steady downward trend of credit card debts for the last year and beyond.

"This seems to suggest that people are still taking on more unsecured debt, but perhaps not through traditional methods such as credit cards. It looks like people might be prioritising paying off their credit cards, whilst shopping around for the greater variety of credit products now available.”

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