According to figures from the Bank of England, £1.5bn was borrowed in November in the form of credit cards and loans, sparking fears that families are taking too much debt on as they pay for Christmas.
Borrowing rose by 8.3 per cent over 2015, which was the sharpest increase since February 2006. This has led to concerns that people are letting themselves get into more debt than they can reasonably cope with.
The Bank of England’s Financial Policy Committee, which was created to identify risks within the economy, has promised to keep carefully analysing developments to prevent uncontrollable lending from occurring.
“This spike in consumer borrowing should raise concerns. Debts can quickly spiral out of control and seriously impact people’s lives,” said the head of Citizens Advice, Gillian Guy.
“Slow wage growth and a rise in private rents mean that despite the economic recovery many households face a difficult financial situation, which can lead to mounting pressure to take out loans and put costs on credit.”
Payday loans and credit cards can be helpful, but only if you know for sure you can afford repayments, and on time. They can help spread the cost of Christmas if used smartly, but if they are not, they can cause serious issues at a tough time of the year.
Currently the Financial Conduct Authority (FCA) is investigating the credit card market, which is worth £150bn, with there being concerns that as many as nine million customers are vulnerable and stuck in spiralling debt problems.
