Credit card borrowing in the UK soared to its highest monthly level since 2004 in November, as households struggled with the rising cost of living. According to the Bank of England, individuals borrowed an additional £1.5bn in consumer credit, with £1.2bn on credit cards alone.
The increase, which coincided with the start of the Christmas shopping period and higher energy bills, has raised concerns among anti-poverty charities. Heidi Chow, executive director of Debt Justice, warned that people were becoming more dependent on expensive credit to make ends meet amid falling incomes and rising costs.
StepChange, a debt advice charity, reported that over one in five new clients cited the steep rise in living costs as their primary reason for seeking help. Richard Lane, the charity's director of external affairs, described the figures as worrying, noting a real danger that people will increasingly turn to credit to meet essential spending.
The Bank's data also showed a sharp fall in mortgage approvals, dropping to 46,100 in November from 57,900 in October, reflecting higher borrowing costs after successive interest rate rises. The average interest rate on new mortgages rose to 3.35%, the highest since 2013.
However, economist Samuel Tombs of Pantheon Macroeconomics downplayed the significance of the credit card borrowing surge, saying it merely made up for weakness in previous months. He noted that the stock of consumer credit remained well below pre-pandemic peaks and that households had been increasing mortgage overpayments and stockpiling cash.
