Growth in credit card debt surges to 12-year high

Credit card debts have surged at the fastest annual rate in 12 years in February. The latest figure from UK Finance shows that consumer spending use of credit cards, with outstanding levels of card borrowing, grew at a rate of 6.3 percent over the year, whilst the use of loans and overdrafts continues to fall.

Total market credit card figures from UK Finance show annual growth of 8.3% in the amounts of credit outstanding – the highest figure since 2006.  UK Finance also released separate figures for high street banks, which showed slower annual growth of 6.3% in outstanding levels of card borrowing.

Following UK Finance’s latest lending update, Tashema Jackson, money expert at uSwitch.com, says: “The growth of outstanding credit card debt, at the highest rate since the financial crisis, could be a wakeup call for millions of consumers who are ever more reliant on their credit cards to make up the shortfall on their essential household purchases. This is particularly true as the cost of running a home has increased by nearly £500 in a year, putting further pressure on household budgets.”

“For many other consumers, managing your debt can prevent you from falling into that cycle. Where possible, consider moving your credit card debt onto a card with a 0% balance transfer offer, as that would ensure you pay 0% on your outstanding balance and give you some much needed breathing space to pay it off. If you are looking to use your card, find one with low or 0% interest on purchases – this will help spread the cost while keeping the interest you pay down to a minimum.

There were 220 million credit card transactions in February.