A report from the Bank of England indicated that lenders overestimated the number of people that would default on unsecured credit such as loans and credit cards.
Lenders had originally expected an increase to default rates on unsecured credit, but in the last three months of 2009 the rate fell.
However, the Bank's Trends in Lending report showed that the amount lost through defaults increased during the same period.
As a result, the cost of interest on credit card
The margin between interest rates on credit cards
and the Bank rate is much bigger than this time last year due to the heightened credit risk, but the report showed that the difference remained relatively static on personal loans
Lenders have tightened lending criteria becoming stricter in who they lend money to as a result of the economic downturn.
However, lenders had expected unemployment rates to be higher, which would naturally have led to an increase in default numbers.
In the three months to November the number of people out of work in the UK saw an unexpected fall.
More and more consumers have been paying off their unsecured credit bills, and lenders told the Bank that they didn't expect this trend to change anytime soon.
Written by Sam Gooch