food spending and reduce their use of gas and electricity. As utility and the weekly shop becomes more expensive, a significant number of low-income households appear to be turning to expensive forms of lending to cope with the crisis.
Last month, credit card borrowing in the country jumped by a whopping £1.5 billion to £59.5 billion, according to the Bank of England. The increase is the highest since records began in 1993, which pushed the total amount of unsecured lending to £1.9 billion, a 90 per cent hike from the prior month. Data published by the central bank show that the annual growth rate for all forms of unsecured credit rose to a two-year high of 4.4 per cent as a result, thereby pushing the aggregate outstanding balance of consumer credit to £199.5 billion.
Commenting on the figures, anti-poverty charities noted that it was worrying how consumers have started to spend more on credit cards, as families say they are forced to choose between eating and heating owing to the cost of living squeeze. Joanna Elson, the chief executive of the Money Advice Trust, called on the chancellor to provide more targeted support for low-income households, noting that the BoE data provide “an indicator of the underlying challenges households face in meeting the growing cost of living”. “Our concern is that more people will be pushed to credit to cover rising bills, which could be storing up problems further down the line when repayments are due,” she said.
Christine Jardine, the Liberal Democrat Treasury spokesperson, said it not surprising that consumers are turning to credit cards as the government’s “stealth taxes” and failures on pensions and benefits add “real-terms cuts” to household incomes. “More and more people will have no choice but to turn to credit cards, massively increasing their long-term costs, just to make ends meet,” the Minister said.
