New consumer credit lending fell by 4% in April 2011, according to latest figures from the Finance & Leasing Association (FLA).
New purchases on store cards were down by 21% and new instalment credit taken out in shops was also down by 16%.
The FSA said the decline in demand comes at a time when some parts of the credit market are already shrinking and the government is drawing up plans for further changes to the way credit is regulated.
Fiona Hoyle, FLA head of consumer finance, said that government changes needed to support the market.
She added: “Consumers are thinking very carefully before taking out credit and this is reflected in the fall in credit spending on the High Street. Over the last five years credit providers have introduced extensive new rights for consumer credit customers.