The UK is set to borrow an additional £9bn on credit cards over the next six months to survive the cost of living crisis, according to a new report by subscription lender Creditspring. According to the most recent Bank of England figures, UK individuals are currently borrowing £1.5bn every month on credit cards.
This borrowing will increase the UK’s total credit card bill by 18% to £68.9bn as living costs and inflation soar and households struggle to keep up. Given these figures were announced before Russia’s invasion of Ukraine pushed energy prices up, borrowing is likely to increase in the coming months, with Creditspring’s research indicating that credit cards remain the most popular form of borrowing.
Monthly debt repayments have jumped 9% in a year and the total balance of unsecured loans among people applying for credit has increased by 13% year-on-year. Surging living costs make budgeting more difficult, putting them at increasing risk of falling into debt if they struggle to meet repayments from borrowing. As a result, households are increasingly worried about their financial future: almost a third (29%) admit they are terrified about their finances, compared to 20% last year - a jump of almost 50%.
