Austerity Britain dug into its savings to pay for Christmas as shoppers left the plastic alone and paid off debts at the fastest rate for nearly 20 years in December.
The Bank of England said consumers repaid £377m of credit in December – the biggest since records began in 1993. They paid £16m off credit cards and cleared £361m in overdrafts and other unsecured loans.
Meanwhile the Building Societies Association said savers plundered their accounts for £100m during the month.
A host of retailers have issued profit warnings and offered big discounts to try to part shoppers from their cash.
Nida Ali, economic adviser to the Ernst & Young ITEM Club, warned: "The fall in consumer credit reflects individuals' reluctance to take on more debt in a tough economic environment. Even though inflation is likely to ease sharply over the course of 2012, it will be some time before real incomes start to stabilise."
IHS Global Insight's Howard Archer said: "Housing market activity is likely to be pressurised appreciably in the early months of 2012 at least by weakened economic activity, rising unemployment, muted wage growth and very low consumer confidence."