Reliance on plastic has surged at the fastest rate in 17 years, the news outlet has reported
Credit card borrowing in the UK accelerated in June at the fastest yearly rate since 2005, The Guardian reported on Tuesday, citing data from the Bank of England.
According to the report, borrowing jumped by £740 million ($836 million) month-on-month, coming in 13% higher than at the same time last year.
Broader consumer credit, which includes unsecured personal loans and overdrafts, spiked to £1.42 billion ($1.65 billion), surging 6.9% – its fastest annual increase since March 2019. The regulator said that borrowing using all forms of consumer credit in June was lower than in the previous month but remained above the 12-month pre-pandemic average of £1 billion ($1.16 billion).
Analysts say that the surge in borrowing comes as UK households are increasingly relying on credit cards to cope with rising prices. They also add that the situation is likely to worsen due to further spikes in inflation (10.1% in July) and the threat of larger energy bills during the winter heating season. Last week, the UK’s energy regulator Ofgem forecast that the average annual household energy bill would rise to £3,549 ($4,137) starting in October, which would be an 80% increase from April.
One in four Britons won’t turn on heating this winter – study
“Confirmation on Friday of the huge hike in energy prices will have only added to the worries of millions of people concerned about how they will make ends meet in the coming months… For many households, however, options are already running out, with more turning to credit to cover essential needs. And for those who are already in difficulty, the situation is only set to get worse without intervention,” Joanna Elson, the head of Money Advice Trust charity, told the news outlet, calling on the government to provide targeted help to those hit hardest by the cost of living crisis.
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