Rising credit card debt in the UK

Updated: Jul 15

The level of borrowing is at its highest point since 2005.

According to figures issued by the Bank of England on Tuesday, credit card borrowing increased in the UK in April at the quickest annual rate in over two decades.

The regulator reported that consumer credit overall increased by 5.7 percent year over year, the greatest growth since February 2020, while card expenditure increased by 11.6 percent, the largest increase since November 2005. In the meantime, the housing market has stagnated, with fewer people obtaining mortgages and a decline in home purchase approvals.

It demonstrates how the ominous economic storm clouds grow darker by the hour. People can take out credit and loans if they feel confident, but in this situation, it is almost likely because they need additional money to pay their bills and put food on their tables, according to Andrew Montlake, managing director of the UK-based mortgage broker Coreco, who spoke to the Guardian.

Inflation in the UK surged to 9 percent in April, the highest level since 1982, driven by soaring energy prices, underscoring a deteriorating cost-of-living crisis. The government claims that between April 2021 and April 2022, gas prices increased by 95% and power prices by 54% for British consumers, in part as a result of Western sanctions imposed on Russia after it began its military action in Ukraine.

Strong demand during the post-pandemic economic recovery and supply chain bottlenecks have also contributed to increases in the price of food and consumer products.

Due to interest rates that can reach double digits, credit card debt is regarded as the worst type of debt, as opposed to personal loans for specific necessities like paying for a car or college.

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