UK credit card borrowing rises at fastest annual rate for 17 years
Credit card borrowing is rising at its fastest annual rate in 17 years, the Bank of England said on Tuesday, with analysts warning a recession looks increasingly likely as growing numbers of households go into debt to make ends meet.
The annual growth rate for credit card borrowing hit 11.6% in April – the highest figure since November 2005. The rate for all consumer credit increased to 5.7% in April, from 5.2% in March, rising faster than at any time since just before the pandemic.
The latest data shows a “divided nation”, analysts said, with millions borrowing money to buy food while others splashed out on treats and luxuries using their credit cards. The Money Advice Trust, the charity that runs National Debtline, said the Bank of England’s consumer credit figures were “an ominous sign of the mounting pressure on household finances”.
It added: “Using credit to cover essential costs like food and energy is often a sure sign of financial difficulty.”
“Prices are rising, interest rates are rising, and a recession looks increasingly likely at some point this year,” said Jayadeep Nair at credit reference firm Equifax UK. “The government and the Bank of England have taken steps to temper the full impact of the cost of living crisis … but the measures announced so far will only soften the blow. We have already seen a rise in the number of people struggling to pay bills and pay off existing debts, and much of the demand for new credit is by those looking for a way to ride out the crisis.”
Households are struggling with a surge in energy prices after the cap rose, adding £700 to the average bill. Measures announced by the chancellor last week will mean hundreds of pounds in one-off payments being distributed to households over the
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