Barclays wrote off nearly £1.7bn in 2010 as a result of consumers defaulting on their credit card debt, the group's results showed today.
Its Barclaycard arm suffered impairment charges of £1.69bn in the UK and worldwide during the year, the equivalent of 5.7pc of outstanding plastic debt, while 3.4pc of customers were at least a month behind with their repayments.
But the figure was 6pc down on the £1.8bn hit it took in 2009, when bad debts soared by nearly two-thirds due to the economic turndown, as well as the high levels of debt people were holding on their cards.
The group said the improvement during the past year reflected its focus on risk management, as well as the improving economy.
It added that the extended balances people now had on their credit cards had helped boost the money it made through interest charged on the debt by 3pc to £2.81bn.
Barclaycard's 21.7 million customers, including 11.2 million in the UK, owed a total of £20.9bn on their plastic at the end of last year, more than 40pc of which was classed as extended balances.
Pre-tax profits at the business rose by 9pc to £791m, with the contribution from its South African card business soaring by 85pc as a result of lower default rates.
Barclays' UK retail banking business enjoyed a strong year as it made the most of being one of only a few lenders that remained active in the mortgage market.
Outstanding mortgage balances increased by 16pc during the year to £101.2bn, through a combination of the acquisition of Standard Life Bank and high levels of new mortgage lending.
Its Great Escape campaign, which encouraged people to remortgage off their existing lenders' standard variable rate, and its Track to Fix initiative, which enabled people to take out a tracker deal but switch to a fixed rate at a later date, helped to boost total advances during the year to £16.9bn, giving it a 13pc market share.
Net lending, which strips out redemptions and repayments, was £5.9bn, although this rose to £7.3bn once negative lending by Standard Life Bank for the year was stripped out.
The group had an average loan-to-value ratio of 43pc on its total mortgage book, rising only slightly to 52pc on new lending during the year.
The acquisition of Standard Life Bank helped to boost the total level of deposits Barclays held for consumers and businesses by 12pc to £108.4bn.
Bad debt charges for the division fell by 21pc to £819m, down from £1.03bn in 2009, just £29m of which related to mortgages.
Overall, pre-tax profits at the UK retail banking arm rose by 39pc to £989m, on the back of strong income growth and lower impairment charges, which more than offset a rise in operating costs.