Credit seekers could turn to alternative lenders as borrowing falls

Consumers seeking credit could consider alternative lending platforms rather than credit cards or overdrafts, as borrowing appears to fall.

Ahead of the release of the latest Bank of England consumer credit report, it has been estimated that consumer credit declined in April with an additional £1.2bn borrowed during the month. This compares with £1.6bn borrowed on net during March 2023.

Money transfer comparison site moneytransfers.com has warned that “a decrease in consumer credit suggests that individuals are borrowing less, which can have implications for the wider economy.”

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“It may indicate reduced consumer confidence, cautious spending behaviour, or tighter lending conditions,” said Jonathan Merry, chief executive of moneytransfers.com.

“A decline in consumer credit might lead to lower consumer spending, impacting businesses that rely on consumer demand. This, in turn, could affect employment levels, business profitability, and overall economic growth.”

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Merry suggested that with a decrease in consumer credit, individuals may explore alternative financing options to meet their needs.

“This could include seeking assistance from family and friends, utilizing savings or investments, or considering non-traditional lending platforms,” he said.

“It may also encourage individuals to explore financial planning and budgeting strategies to manage their finances more effectively.”

Merry added that a decline in consumer credit levels might reflect reduced consumer confidence in the economy or concerns about personal financial security.

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