Households borrowed £1.2 billion on credit cards over the Christmas period, which is the highest amount since 2004, as the cost of living crisis deepens.
Bank of England figures have revealed that in consumer credit households borrowed £1.5 billion in November 2022 up from £748 million the previous month.
In November additional consumer spending was split between £1.19 billion on credit cards and £317 million in other forms of credit with personal loans and buying new cars on finance.
Karim Haji, a financial services head at KPMG said, “While this time last year we were breathing a sigh of relief that the worst of the pandemic was behind us, that optimism now seems a dim and distant memory.
“We enter 2023 cautiously with a subdued economy expected to last well into the year.
“The increase in the cost of living has driven consumer lending up in November with an additional £1.2 billion of credit card borrowing.
“Whilst this year’s Christmas discretionary spending will have been sacrificed, inflation on essentials and the increased cost of energy means debt is still being accumulated for food, lighting and staying warm.”
Richard Lane, director of external affairs at StepChange Debt Charity, warned the increase in borrowing before Christmas is “worrying.”
Lane said, “The impact of the cost of living crisis on people’s finances shows little sign of abating.
“Although government support is continuing to have a positive effect on the proportion of new StepChange clients with energy arrears, energy debt remains high and cost pressures from elsewhere are still driving people into problem debt.
“Today’s Bank of England figures showing increased borrowing even before the traditional festive spending period is also worrying, particularly in light of our pre-Christmas research which found that one in 12 UK adults (8%) would be using credit to pay for Christmas.
“With financial pressures across the board creating problems for an increasing number of households, there is a real danger that people will increasingly be turning to credit to meet essential spending into the new year and beyond.”