CONSUMERS cut their debts at the fastest rate in two decades during December amid signs they dipped into savings to pay for Christmas.

Bank of England figures showed a net repayment of £377m in unsecured loans, the largest since records began in 1993 as analysts said consumers continued to lack the appetite to borrow amid concerns about the wider economy and jobs.

The figure reversed the £400m increase in consumer credit reported for November, which had been in line with the six-month average.

Credit card borrowing was flat for the third month in a row, despite Christmas.

Meanwhile, the Buildings Societies Association (BSA) said consumers took out £100m of savings in December, indicating they could have been using spare cash to help them over Christmas rather than taking on more debt.

BSA director-general Adrian Coles said: “It is clear that savers are still struggling to save as much as they would like, or are choosing to use spare cash to pay down debt instead.

“The fall in the rate of inflation may offer some breathing space to households but, if conditions in the labour market continue to deteriorate and wage growth remains low, household finances are likely to remain squeezed for some time to come.”