Credit card borrowing surged at its fastest annual rate in almost two years as UK households took on debt to cope with the rising cost of Christmas, according to the Bank of England.
In November, individuals borrowed an additional £2.1 billion in consumer credit, a rise of 10% from October's £1.7 billion increase. This surge is largely attributed to people borrowing more during the critical pre-Christmas shopping period as households struggle to manage everyday costs under mounting pressure from the rising cost of living.
Net borrowing through credit cards jumped by £100 million to £1 billion, while borrowing using other forms of consumer credit rose by £100 million to £1.1 billion. Annual growth in credit card borrowing accelerated from 10.9% in October to 12.1%, the highest rate since January last year.
Experts point to a growing trend where households turn to credit to make ends meet, with Simon Trevethick of the StepChange debt charity stating that "everyday costs are becoming harder to manage without turning to credit." This sentiment is echoed by those who believe people may be borrowing more in preparation for Christmas, as 14 million consumers would struggle to afford festive treats.
However, a separate set of figures from the British Retail Consortium (BRC) shows a slight increase in shop price inflation to 0.7% in December, up from 0.6% in November. This rise was fueled by an uptick in food price inflation to 3.3%, but non-food prices dropped by 0.6% compared to the same period last year.
Economists interpret these trends as indicative of households becoming more confident in using borrowing to finance their spending, despite concerns over the health of the economy holding consumers back. However, they also note that households are still cautious and have been depositing more with banks and building societies by an additional £8.1 billion in November.
Overall, while credit card borrowing is on the rise, it remains to be seen how these trends will impact consumer spending in the coming months.
In November, individuals borrowed an additional £2.1 billion in consumer credit, a rise of 10% from October's £1.7 billion increase. This surge is largely attributed to people borrowing more during the critical pre-Christmas shopping period as households struggle to manage everyday costs under mounting pressure from the rising cost of living.
Net borrowing through credit cards jumped by £100 million to £1 billion, while borrowing using other forms of consumer credit rose by £100 million to £1.1 billion. Annual growth in credit card borrowing accelerated from 10.9% in October to 12.1%, the highest rate since January last year.
Experts point to a growing trend where households turn to credit to make ends meet, with Simon Trevethick of the StepChange debt charity stating that "everyday costs are becoming harder to manage without turning to credit." This sentiment is echoed by those who believe people may be borrowing more in preparation for Christmas, as 14 million consumers would struggle to afford festive treats.
However, a separate set of figures from the British Retail Consortium (BRC) shows a slight increase in shop price inflation to 0.7% in December, up from 0.6% in November. This rise was fueled by an uptick in food price inflation to 3.3%, but non-food prices dropped by 0.6% compared to the same period last year.
Economists interpret these trends as indicative of households becoming more confident in using borrowing to finance their spending, despite concerns over the health of the economy holding consumers back. However, they also note that households are still cautious and have been depositing more with banks and building societies by an additional £8.1 billion in November.
Overall, while credit card borrowing is on the rise, it remains to be seen how these trends will impact consumer spending in the coming months.
I'm worried about people relying so heavily on credit cards for Christmas gifts 
. I mean, sure, it's nice to splurge a bit, but when everyone's doing it and you feel pressured to keep up... it can get out of hand 
. And what really gets me is that some folks are using credit just because everyday costs are getting tough 
. Can't we find ways to save up or get creative with our holiday spending instead? 
. I think people are getting desperate 'cause prices are rising like crazy and they can't afford the basics let alone some fancy gifts 
. And then there's this shop price inflation thingy - is it really just about households getting confident in using credit? Or are we seeing some bigger issues here?
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either. I mean, everyday costs are already adding up, so it makes sense that they'd turn to credit to make ends meet 
Oh man I'm getting super worried about all this debt piling up! 
. It's not just Christmas shopping either, it's like they're turning to credit for everything else too 
. Everyone needs to take a step back and reassess their finances, make a budget and stick to it, trust me you won't regret it 
Credit cards just got even more tempting for people struggling to make ends meet... £2.1 billion borrowed in Nov? 