Credit card borrowing rises at fastest rate in more than a decade sparking Bank of England fears of a new debt crisis
Bank of England shares concerns British households are living beyond their means as spending on plastic grows 9.3 per cent
CREDIT card borrowing has risen at its fastest rate in more than a decade and raised fears of a new debt crisis.
Spending on plastic grew 9.3 per cent in the year to February, up from 8.6 per cent the month before.
That is the fastest growth rate since February 2006 and comes amid fears households are living above their means.
Some £600million was piled on credit cards last month, with households owing £67.3billion, The Bank of England said.
The rise pushed up the overall flow of consumer credit to £1.44billion in February. City analysts expected £1.3billion.
The Bank’s financial policy committee fears a repeat of the debt bubble which led to the 2008 financial crash.
It said earlier in the week household debt is “high by historical levels”.
Peter Tutton, head of policy at StepChange Debt Charity, said: “Consumer credit continues to rise rapidly, adding to levels of UK household indebtedness that are already high by historical standards.
“With the Bank of England highlighting the need for lending standards to be monitored closely, we urgently need action to prevent more households falling into unmanageable debt.
“February saw the highest increase in credit card debt in 11 years and the Financial Conduct Authority (FCA) has already raised concerns over levels of persistent credit card debt.”
He called for the FCA to impose “responsible lending standards”.
Mr Tutton suggested it could include “banning unsolicited credit limit increases and compelling lenders to intervene early when people fall into difficulty”.