Credit Card Debt Soars at Highest Rate Since Recession

January 20, 2015

Luke-Notley small (Custom)The Bank of England has suggested that intense marketing of credit cards along with more attractive interest charges and higher approval rates has led to the highest level of credit card debt since the last recession. Over the past three months, the demand for credit card debt and personal loans has grown to the highest level since 2007, when the Bank of England began compiling measurements of UK credit conditions.

More than half of the lenders included in a report by the Bank of England demonstrated a growing demand for unsecured lending between October and December 2014. Furthermore, over a third of credit card providers also suggested that they anticipate a continued increase in demand for credit card products over the next three months.

More records were broken in this report, with the Bank of England revealing that UK consumers borrowed £1.25bn in November 2014, the largest monthly amount since the recession. Gross customer credit almost reached £19bn.

This is having a negative impact upon UK consumers who are struggling with their levels of debt and monetary obligations.

Gillian Guy, chief executive of Citizens Advice, warned: “Many families are starting the year in the red. Credit card debt is the second most common debt problem brought to Citizens Advice Bureaux. Demand for credit cards and unsecured loans at its highest point for seven years is a warning that people are struggling to pay everyday costs.”

There was some good news for borrowers, with the report showing that fewer UK households were defaulting on debt repayments during the recorded three months – demonstrating more responsible borrowing and a low default rate on unsecured debts.

The final three months of 2014 were also problematic for small businesses which have experienced evaporating credit availability.

Adam Marshall, director of policy and external affairs at the British Chambers of Commerce explained: “With credit availability to small firms expected to weaken in the coming months, the findings from the latest credit conditions survey reinforce the case for more radical action – by financial institutions, the regulators, the ministers building up the British Business Bank and the Bank of England itself, which must do so much more to build up a liquid market for SME debt.”

If you are struggling with personal debt and cannot meet the repayments, the InControl team may be able to help you find a suitable solution for your financial troubles. Visit the InControl homepage, or call our dedicated team on 0800 072 6623, to find out how we can help you.