The news comes from the latest report from the Bank of England, whose figures show that the level of consumer credit on things like unsecured loans and credit cards fell by a total of £377 million throughout the month of December last year.

This is the largest single monthly drop in lending since the Bank started to keep records, back in 1993 and it includes the amount borrowed on unsecured loans, overdrafts, credit cards and hire purchase agreements, which all fall under the consumer credit act.

The figures exclude any new loans within the home owner loan and mortgage sector, which has actually seen an increase in borrowing over the same period.

Economists and other financial experts have said that the reason for the drop in new unsecured loan numbers was largely due to the fact that a growing number of consumers are cutting back on their spending in the current tough economic climate and repaying existing loans, rather than borrowing extra amounts.

It is expected that the drop in loan numbers will encourage the Bank of England to extend its current programme of quantitative easing at its next Monetary Policy Committee meeting in February, in an attempt to boost the economy.

Nida Ali of Ernst & Young said “The fall in consumer credit reflects individuals’ reluctance to take on more debt in a tough economic environment. The figures support our view that the Bank of England is likely to authorise further asset purchases next month.”

The new measures have been introduced by the Finance and Leasing Association (FLA) as part of their revised code of conduct for their members and are designed to provide extra protection for those borrowers who are considering taking out a store card, or a short term unsecured loan, such as a pay day loan, for example.

The FLA lending code, as it is known, will place a ban on commission payments to store staff who sell an in store card to a customer, as well as deferring any benefits on the card, such as in store discounts for at least seven days from the card being taken out.

The new code will also ensure that anyone taking out a short term loan, such as a pay day loan, are made fully aware of the charges and interest rates involved with this type of loan before they apply and are also given a warning that such a loan is not designed for long term borrowing needs.

The number of times a short term loan can be rolled over into a new loan will also be restricted to three under the FLA code of conduct and a new credit assessment must be carried out on each occasion, to ensure that the borrower can afford the loan.

At the moment, these new rules only apply to members of the FLA, of which the majority of pay day loan companies are not a member. However, similar rules are likely to be introduced across other trade bodies in the near future as a result of the current FLA changes.

Fiona Hoyle of the FLA said “The new measures for store cards and short term loans reinforce the commitment of all FLA members to responsible lending.”

Whilst a pay day loan can be a useful tool to get someone to their next pay day, if used correctly and repaid on time, many people are not paying the loan off within the short time period and are therefore being charged high levels of interest on their loan.

The survey found that 33 per cent of those people with a debt problem have taken out a pay day loan at some time, whilst 14 per cent have a bank loan, 32 per cent are using an overdraft, 28 per cent have credit card debts, 9 per cent have store card debts and 5 per cent have loans with a doorstep lender.

Of those pay day loan customers who were interviewed, around 47 per cent have taken out six or more pay day loans over the course of the last twelve months, often rolling one loan up into a new loan, thereby incurring even more charges and interest.

Around 61 per cent of loan applicants have applied for more than one pay day loan at a time, as one loan on its own would not be a sufficient amount for their needs.

Furthermore, 56.2 per cent of pay day loan users also have more than £500 outstanding on their pay day loan debts and 69 per cent of borrowers have no idea as to what rate of interest they are paying on their pay day loan.

86 per cent of pay day loan funds were used to pay for essentials such as food and utility bills, with the second largest use of a new loan being to pay off an existing pay day loan.

For some individuals who find themselves in this situation, it may be possible to improve their finances simply by reviewing their spending habits, personal loans and other outgoings and comparing their current position with where they were twelve months ago.

The advice has come from a financial solutions company, Think Money, who are encouraging people to review their loans and finances on an annual basis, making comparisons with the previous twelve months and altering their habits or restructuring their loans and other bills where necessary.

Although many individuals may currently feel as though they have been struggling with their personal loans and other debts forever, by comparing their current level of loan and card debt with the same time last year, it is possible to see if their situation has improved, or of their loan debts are becoming worse.

Once this has been established it is then possible to see where any changes have occurred which could have caused the position to improve or worsen.

By going through your monthly bills and outgoings, it may be possible to make regular savings, by cutting back on unnecessary expenditure for example, or switching energy providers, or moving any outstanding loan debts to a cheap loan option through a debt consolidation loan.

If you are unsure of how to proceed and review your finances, for example, by comparing different insurance products or cheap loan deals, then you should seek the help and advice of an independent financial adviser, who can provide unbiased help on your situation and advise what is the best course of action, particularly when it comes to reducing your loan debts.

Despite their growing popularity, equity release loans are still a very complicated and potentially high risk loan product and as a result of this, it is advisable for those home owners who are considering taking out an equity release to seek professional advice from an independent financial adviser.

According to the latest figures from the equity release loan trade body SHIP (Safe Home Income Plans), around 90 per cent of all equity release loans taken out over the course of the fourth quarter of last year, were done so by using the services of an independent financial adviser (IFA).

This amounted to a total new loan amount of £193.3 million, where the borrower took advice from an IFA before choosing a loan deal, compared with just £22.6 million worth of loan sales which were sold directly by loan providers.

SHIP said that this was the highest percentage of new loan business written by loan brokers and IFA’s since their records were first kept, back in 2003, which highlights how seriously people are starting to value professional advice in such matters.

Apart from being able to advise on the most suitable provider for an equity release loan, an IFA can also give valuable advice on whether or not an equity release loan is the right product for a particular individual.

This would include the effects of rolled up interest on the loan and how it would reduce any family inheritance, how it would affect a person’s tax position and whether it would have an impact on a person’s entitlement to various state benefits.

Research conducted by the Prudential has found that somewhere in the region of 18 per cent of people who plan to retire this year, will do so with existing debts hanging over them, either in the form of a home owner loan, personal loan or credit card bills.

Although the number of people entering retirement with loan debts has actually dropped slightly since last year, the level of individual debt has increased significantly. Last year, the average outstanding loan debt was £33,100, but this is expected to increase to £38,200 during this year.

The main sources of these retirement debts are made up of existing home owner loans and mortgages and credit card bills.

The average retiree with outstanding loan debts is expected to be dipping into their retirement savings to the level of around £260 per month in order to service their loan and card repayments, but some individuals have said that they will be paying as much as £500 per month on loan debts.

Paying off their loan debt is likely to take an average of around 4 years for a typical retiree, but some have admitted that they are never likely to ever clear their loans and credit cards completely.

Vince Hughes-Smith of the Prudential said “With a manageable repayment programme in place, debts need not become an issue for this year’s retirees and there is plenty of help available through the Money Advice Service and Citizen’s Advice Bureau.”

A new survey conducted by Aviva on their Family Finances Report, has found that although the average family income in the UK has increased by around 7 per cent over the course of the past twelve months, the average family debt levels on unsecured loans and credit cards has increased by around 48 per cent over the same period.

Despite the fact that many families are trying to pay off their loans and other debts early, the survey found that the typical household loan debt, excluding home owner loans and mortgages has now risen from £5,360 back in January last year, to £7,944 in January this year.

The average net annual income for a typical household in the UK is £24,792, which means that someone with average unsecured loan and credit card debts has the equivalent of around 32 per cent of their net income outstanding in personal debts, without taking their home owner loan into account.

The survey also shows that, fewer families are putting money to one side in the form of savings, whilst personal loan debts are increasing at an alarming rate. This is the exact opposite of how people should be conducting their finances, particularly in the current economic conditions in the country.

Whilst many families are concerned about their increasing loan debts as well as the possibility of losing their job at some point in the near future, six out of ten families have not taken out any form of protection to protect their loved ones against loss of income or cover for their loan debts.

Last year, the government introduced the stamp duty holiday for first time buyers to help and try and reduce the costs of buying a house and taking out a home owner loan or mortgage for those buyers looking at properties of between £125,000 and £250,000.

But the current incentive for first time buyers is now due to end on 24th March this year and those potential buyers who are either in the process of buying, or are looking for a house and thinking about applying for a home owner loan or mortgage should  act quickly in order to complete their purchase before the deadline.

Once the closing date has passed, first time buyers will once again have to pay stamp duty of one per cent on the property they buy, if it costs more than £125,000 but less than £250,000, which could cost someone up to £2,500, on top of their deposit, solicitor’s fees and homeowner loan costs.

The end of the stamp duty holiday is likely to cause an increase in the number of first time buyer loans completing throughout February and March, as first time buyers make the effort to complete their purchases before the deadline date, although this increase could be compensated for by a reduced number of first time buyer loans over the summer months.

Wendy Evans Scott of the National Association of Estate Agents said “With only two months remaining, first time buyers must act quickly to avoid paying stamp duty land tax on their first home purchase.”

“If you’re in a chain and waiting to complete your purchase then make sure others in the chain know about the end of the tax holiday too. Good communication with your solicitor can help move the process forward, helping you beat the 24th March cut off.”

This week has officially been described as the most depressing week of the year, with yesterday (Monday 23rd January), the most depressing day of the year, now known as “Blue Monday”.

 Apart from the normal post Christmas blues, many individuals across the country are now particularly worried about their personal loan and credit card debts and in particular, how they are going to manage to make their full loan repayments on top of all their other household bills this month.

The Debt Advisory Line, an award winning debt management company, has said that it expects to see the number of calls from struggling loan and credit card borrowers increase by around 20 per cent over the course of this month, as people realise they are in a position where they are unable to manage their personal loans and credit card debts.

It seems that the final week of January is when many individuals finally realise they have a serious loan debt problem and are unable to cope with it on their own, at which point they contact someone  who is able to provide professional help with their loans and other debts.

Jim Rowley of the Debt Advisory Line said “December is one of the biggest spending months leading to a tough January for most of us. This combined with the increase of home utility bills due to cold weather conditions equals bad news for people struggling to keep up with regular direct debits and overdue credit card or loan repayments.”

A new survey conducted amongst financial advisers and loan brokers, has found that a large proportion of this sector are anticipating a further significant increase in the amount of bridging loan business they write over the next twelve months.

The survey, from West One Loans, who specialise in bridging loans and finance, found that the average loan brokers is expecting an increase in bridging loan activity of around 27 per cent over the course of the next year, with those who focus on bridging loans expecting an increase of around 33 per cent for the year.

Almost two thirds of the loan brokers who were interviewed said that they had seen an increase in their bridging loan business, with some saying that the loan numbers had actually doubled within the last twelve months.

The figures also showed that the majority of new loan business written by loan brokers and advisers is now in the Buy to let sector, as both new and experienced landlords take advantage of low property prices and cheap loan deals.

Duncan Kreeger of west One Loans said “The bridging loan industry has grown rapidly since 2010. Net lending is up 56 per cent, which makes the mainstream loan market look turgid by comparison and the rate of growth shows no signs of slowing.”

“Only 6 per cent of brokers think it’s a bad time to invest in buy to let, while 83 per cent think it’s now a good time for landlords to expand their portfolios.”