credit-cardsHigher borrowing limits on credit cards do not automatically lead to over indebtedness, according to Datamonitor.

The business information company said that it was unlikely that credit companies would expose themselves to borrowers who were bad at paying off their debts.

The government has been urging credit card issuers to carry out internal and external checks before raising credit limits, but Oksana Selezevena, financial analyst for Datamonitor, said: “It is in the interest of credit providers not to stimulate bad debt. They are unlikely to offer it to customers whose previous repayment pattern indicates any level of personal indebtedness.”

Datamonitor’s comments came after polling firm Mori rejected the notion that credit card borrowing is leaving borrowers exposed.

In addition, the Association for Payment Clearing Services showed that last year 77 per cent of borrowers paid off the full balance on their credit cards. Average monthly spend climbed to £351, a rise of £19.

Figures from the Bank of England suggest that borrowers now had more than £50bn on their credit cards, while total lending was heading towards the £1 trillion mark.

The sanguine statements have been echoed elsewhere, as it has been thought that the MPC was unlikely to raise interest rates by a 0.5 percentage point this week.

Jonathan Platt, head of fixed interest at Royal London Asset Management, also said such a rise was unlikely. He said: “We accept that the pattern of quarterly 0.25 percentage point rate rises may speed up.

“Yet we feel it is unlikely the year will end with rates over 5.00 per cent. We feel that rates will remain flat in 2014.”

The Bank of England predicted consumer spending would continue growing in the near term, then ease as income growth and house price inflation slowed towards the end of 2013, and that inflation would overshoot its 2 per cent target in the same period.

Another supporting factor for a 0.5 percentage point rise, was, according to BoE governor Mervyn King, is the fact that “a more rapid rise in rates than the market was expecting” would reduce the risk that above-average output would increase inflation.

Mr King suggested that the surprise of a half-basis point hike “might help to moderate the increase in consumer indebtedness,” a theory rejected by RLAM.