A record £400 million was repaid from personal borrowings in December as consumers continued to shrink their debts, the Bank of England has saidy.
The net repayment of £400m in unsecured loans is the largest since records began in 1993 as analysts said heightened concerns about the wider economy and jobs were making consumers lose their appetite for borrowing.
Credit card borrowing was also flat for the third month in a row according to the latest Bank of England figures, despite the Christmas season.
Mortgage approvals rose to a two-year high in December, but analysts said the housing market remains weak compared with long-term norms, and is likely to come under further pressure from unemployment and low confidence.
The number of loan approvals for house purchase rose to 52,939 in December, the highest figure since December 2009 and an increase of just over 300 on the November.
Samuel Tombs, an economist at Capital Economics, described the latest figures as "disappointing" and said they showed the recent recovery in mortgage approvals had "ground to a near halt".
He said: "The monthly rise of 300 in the official measure of mortgage approvals for new house purchase to 52,900 was well below the consensus expectation of a rise of more than 1,000."
The value of the mortgage approvals stood at £7.5 billion, unchanged from last month's figure.
The figures were released as the Building Societies Association said £100m was taken out in net deposits in December, suggesting that people used their savings to help cover Christmas rather than taking out more credit.
Overall, the BSA said savings balances held by mutuals grew by £4 billion last year, compared with a smaller £200 million increase in 2010.
BSA director-general Adrian Coles said: "Growth in savings balances at mutuals increased significantly in 2011 compared to previous years, although 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."
The BSA's figures also showed a 16% increase in gross mortgage lending in 2011 compared with 2010, to reach £23.6 billion, although house transactions generally remain low by historic standards.
Howard Archer, chief UK economist at IHS Global Insight, said he expected consumer borrowing to remain limited over the coming months, although he said more people could turn to loans as their budgets come under further pressure from job losses.
He said: "The record net repayment in consumer credit in December highlights not only very low consumer appetite for new taking on new
Labour small business spokesman Toby Perkins said: "According to the Bank of England, net lending to businesses has fallen in nine out of the last 12 months and has fallen by more than £10 billion in the past year.
"Despite their promises, ministers have failed to get banks lending to business, in particular to small and medium-sized enterprises.
"It is clear that one year after the introduction of the Government's Project Merlin deal, businesses are still struggling to get the credit they need to survive, expand and take on extra workers.
"Small businesses are being failed by this out-of-touch Government. That's why Labour is looking closely at proposals to boost small business finance as part of our ongoing policy review framework and will look at proven successful schemes to get capital to the small business sector."