Spending on credit cards plunges to record low
SPENDING on credit cards collapsed to one of its lowest levels ever last month, as consumers desperately tried to avoid expensive borrowing on plastic.
Meanwhile, deposits in banks from households and corporates rose for the first time in a year, Central Bank figures show.
The data shows consumers are saving harder and borrowing less in mortgages, loans and credit cards.
Just €685m was spent on personal credit cards last month as consumers tightened their belts ahead of another austerity budget.
Compare this level of spending by consumers on credit cards with just three years ago, when people were racking up more than €1bn every month on plastic.
And there were 112,000 fewer accounts in operation in October compared with the same month last year.
Consumers have shaved €207m off their debts on 1.9 million credit cards in the past year. Overall lending to households dropped by €614m in October compared with the previous month, down to €111bn, as consumers rushed to pay off debts and avoid taking out new loans, the Central Bank said.
And households are paying off mortgage debt faster than new housing loans are being taken out.
The level of outstanding mortgage debt fell by €319m in October when compared with the previous month to €80.8bn.
Meanwhile, private sector deposits in the Irish banks rose by €600m in October compared with the previous month.
Bloxham Stockbrokers economist Alan McQuaid said: "Although there are some elements of these latest banking figures which may please the Government, the underlying message from the data is still one of overall weakness and difficulties in the banking sector."
He added that the State still has a long way to go to reach a point were credit is available to households and businesses which was needed to get the economy moving again.
"The reality is that until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued, severely hampering the recovery prospects for the economy as a whole in the process," he added.