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Reduced Credit Card Finance May Accelerate Economic Slowdown

As the credit card markets continue to come to terms with more expensive finance costs, reduced new customers and a tightening of the new card acceptance criteria by the major companies, there are concerns that this may accelerate the slowdown in the economy. It is a common knowledge that the level of personal debt in the UK as a whole has never been higher and more and more people are struggling. The reduction of 0% credit card transfer deals has also pulled many more people into financial difficulty.

There are real concerns in the market that by cutting off the consumer spending lifeline, i.e. credit, this will see a sharp reduction in retail spending and force more companies to revisit their cost base. This in turn will lead to more job losses, less money to spend and a potentially vicious circle spiralling downwards. Many experts are of the opinion that the market will need to ‘bottom out’ before it can rise again and with the bottom looking some way off that could take some time.

Over the last few weeks it has been interest rates and the property markets which have taken the headlines but retail experts are predicting that slowing consumer spending will soon be the centre of attention.

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