UK credit card borrowing rose at an annual growth rate of 13 per cent in July this year, marking the fastest annual increase since 2005.
The July figures, published yesterday (30 August) by the Bank of England, suggest that UK households are accumulating credit card debt at the fastest growth rate in 17 years in order to cope with soaring living costs and surging energy bills, as inflation hits a 40-year high.
According to the Bank of England, individuals borrowed an additional £1.4bn in consumer credit in July, a slight decrease from £1.8bn in June. £700m was spent on credit cards, with the other half spent on other types of consumer credit. This is above the pre-pandemic average (up to February 2020) of £1bn.
Separate research published yesterday by the financial services insights website Smart Money People (using YouGov polling) found that due to the cost-of-living crisis, two in five UK adults say they are likely to take out a new form of credit in the next year. This includes 5.5 million people across the UK expecting to borrow in order to cover day-to-day expenses.
The research estimates this will add up to £101.1bn of credit over the next 12 months, a sobering figure as the UK looks on the verge of slipping into a recession later this year.