Banks have written off a smaller sum of credit card debt owed by consumers who cannot meet repayments than in previous years.
A smaller amount of debt, owed by hard-hit credit card borrowers, has been written off by banks.
Credit card write-offs have fallen sharply indicating that more borrowers may be in a better position to pay back their debtors.
Figures revealed from the Bank of England show that £740 million was written off in the third quarter of this year, which is the lowest since the first three months of 2008.
Credit card debt is written off by banks when borrowers are unable to pay back the sum they owe. Often this a just a small percentage of the full amount owed, however up to 10% of card holder debt has been written off by financial institutions in the past.
The statistics could be a sign that consumer finances are improving, which was mirrored in research revealed earlier this year highlighting that home repossessions and personal insolvencies have dropped.
However, it may be the stringent restrictions that banks have placed on their lending practices that have led to the fall in write offs.
David Black at the financial consultancy Defaqto said: “It looks as if banks are benefiting from their decision a few years ago to be more careful about who they lend to, especially with unsecured lending”.
Credit card interest rates are often much higher than interest rates on forms of secured lending, such as mortages, because of the lack of collateral put up by borrowers as a form of insurance for banks.