Consumer credit increased to £2.5bn in August

Consumer credit borrowing grew to £2.5 billion in August, up from £2.1 billion in July and above the previous 6-month average of £1.9 billion.

Within this, credit card borrowing was £1.2 billion in August (up from £0.9 billion in July) and borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased to £1.3 billion in August, from £1.2 billion in July.

StepChange Debt Charity is seeing rising borrowing among those seeking debt advice. As of August, three in four (75%) StepChange clients were in credit card debt, up from 69% in August last year.

The charity says the rise in borrowing reflects wider financial pressures facing households. With demand for debt advice also increasing, the figures point to a continued weakening of financial resilience as rising energy costs and other household expenses exhaust savings and leave more people relying on credit to make ends meet.

Richard Lane, Chief Impact Officer at StepChange Debt Charity, said “The Bank of England’s figures add to growing evidence that households are becoming increasingly reliant on credit cards to cope with ongoing financial pressures. Not only is credit card borrowing rising, but millions of people are struggling to keep up with repayments while using credit to cover everyday essentials.

“Our polling this summer found that almost one in six (15%) UK adults, equivalent to more than eight million people, find keeping up with their credit card repayments to be a fairly or very large burden each month.

“It is encouraging that the Government has made tackling cost of living pressures a priority ahead of next month’s Budget. We know that persistently high household bills, particularly energy costs, remain among the biggest drivers of financial difficulty and debt.

“However, with ongoing global uncertainty making it almost certain that we’ll see further significant increases in energy and mortgage costs, targeted support and swift action will be needed to strengthen households’ financial resilience and prevent more people from being pulled into problem debt.”