Credit card borrowing on the rise
Concerns are mounting that low-income families are turning to more expensive forms of borrowing with inflation skyrocketing.
Credit card borrowing has increased massively, to a record high, last month and this has prompted worries that low-income households are having to resort to expensive lending to enable themselves to try and cope with the rising costs of food, clothing, energy, and fuel.
Bank of England figures have revealed that credit card borrowing jumped by £1.5bn in February to a total of £59.5bn – the highest amount of credit debt for the UK since records began in 1993.
The Bank od England says that the increase has pushed the annual growth rate for all forms of unsecured credit to a two-year high of 4.4% and has left the total outstanding balance of consumer credit in the UK at an eye-watering £199.5bn.
Anti-poverty charities have repeatedly stated that the cost of living crisis is leaving ever increasing numbers of families faced with the choice between eating and heating, and they now add that it is worrying for the future that consumers are spending ever more money on credit cards and having to get themselves further into debt to try to alleviate the strain on their finances.
The Chief Executive of the Money Advice Trust – the charity that runs National Debtline and Business Debtline – has said the figures provide “an indicator of the underlying challenges households face in meeting the growing cost of living” and she called on the Chancellor to provide more targeted help for struggling households.
She went on to say, “Our concern is that more people will be pushed to credit to cover rising bills, which could be storing up problems further down the line when repayments are due”.
The Liberal Democrat spokesperson for the Treasury, Christine Jardine, said that when the government is doing nothing to stop their fiscal policies from adding to “real-terms cuts to household incomes with its stealth taxes and its failures on benefits and pensions” that it was no surprise to find more and more households turning to credit cards, and “massively increasing their long-term costs, just to make ends meet”.
Furthermore, the Chief Economist at the consultancy Pantheon Macroeconomics, Samuel Tombs, said that “the big rise in consumer borrowing in February – the largest since April 2018 – likely reflects households attempting to maintain their consumption at a time when real disposable income is falling sharply”.
In short, the continuing cost of living crisis has left millions of people across Scotland and the rest of the UK with a bleak outlook in terms of their finances and at increasing risk of sliding into the debt-cycle if something isn’t done.
If your finances feel like they’re already running away from you, a formal debt solution could be a more effective option to deal with your debts. If you’d like to find out more about the debt solutions available to you, give us a call on 0141 816 0394 or complete our enquiry form.