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Debt: what's around the corner?

Who's borrowing? Who's lending? What can we expect over the rest of the year? The Bank of England keeps an eye on important questions like these and makes a point of publishing its findings to help people understand what's going on in the world of credit.

Its quarterly Credit Conditions Survey gives us an insight into lending and borrowing, telling us what lenders have noticed over the last three months - and what they expect to see over the next three.

So, what stands out in the latest Survey? We often see phrases like 'increased slightly' and 'modest decline' in reports like these, but the final quarter of the year can bring some bigger changes - and this year, lenders are certainly expecting people to reach for their credit cards a fair bit more as we approach the Christmas holidays.

Lenders expect demand for credit card lending to 'pick up sharply' in the final three months of the year; they also predict a more 'modest' increase in demand for non-credit card lending.

Part of that increased demand should be due to marketing campaigns between now and Christmas. Lenders think they'll actually be approving more applications as well.

Looking back over the last three months, some lenders also noted that credit had become more available due to the increases on credit card limits - increases which had been 'driven by improved monitoring of risk'.

A spokesperson for the IVA Advisory Centre commented on the predictions: "There are always two sides to consider: supply and demand. Lending / borrowing only happens when lenders are willing to lend and borrowers are willing to borrow.

"A lot of people will be tempted to borrow money in the run-up to Christmas, but we'd stress the importance of advance planning. There are still three months to go, so we'd advise people to sit down with their budgets and work out how they can spread the cost over the next 90 days, rather than struggling to pay for everything out of December's budget.

"If they don't think they can realistically hope to put enough money aside by then, they may feel that turning to credit is the only way to meet the cost. Again, planning it out in advance is vital. If you do decide to borrow, it's very important to figure out the best way of doing that - and to understand not just how long it'll take to repay the money, but how much it'll cost you in interest by the time the debt is gone."