The amount of money saved by Britons in December fell by more than a half from the figure set aside in November, figures have revealed.
A total of £2.3 billion was put away for a rainy day last month, compared to £4.7 billion in November, figures from the British Bankers' Association revealed. The figure was close to the recent half-year average of £2.7 billion.
As potential buyers continued to stay away from the property market new mortgage lending by the major banks fell to an 11-and-a-half-year low.
With repayments and redemptions stripped out, net lending fell to £880 million, the lowest monthly level since June 1999.
Last month there were just 28,726 mortgage deals approved, a level not seen since January 2009, indicating that lending looks set to remain subdued.
Demand for unsecured borrowing remained weak during December, and contracted by 2.2% during the whole of 2010.
Credit card purchases dropped by nearly 6% in the final month of the year, although this is in part likely to reflect weak retail sales due to the bad weather in the run-up to Christmas.
Repayments continued to be higher than new spending, leading to outstanding plastic debt falling by £53 million once interest and charges were factored in.
Lending through loans and overdrafts contracted for the 17th consecutive month, with consumers repaying £322 million more than they borrowed.
David Dooks, BBA director of statistics, said: "The main banks' net lending rose by £20 billion in 2010, in contrast to lending by all other lenders, which decreased by around £12 billion.
"However, mortgage demand was weak throughout the year, with 10% fewer loans approved than in 2009."