UK credit card borrowing surges amid cost of living crisis

A surge in credit card borrowing to a record high in the United Kingdom last month has prompted concerns that low-income households are turning to expensive forms of lending to cope with rising costs of food, clothing and fuel, The Guardian reported.

Figures from the Bank of England showed credit card borrowing jumped by £1.5bn in February to £59.5bn - the highest since records began in 1993 - pushing the total amount of unsecured lending up by 90% on the prior month to £1.9bn.

The central bank said the rise pushed the annual growth rate for all forms of unsecured credit from 3.2% to a two-year high of 4.4%, raising the total outstanding balance of consumer credit to £199.5bn.

With shoppers turning to cheaper supermarkets such as Lidl and Aldi to make ends meet and increasing numbers of families saying they are being forced to choose between eating and heating, anti-poverty charities said it was worrying that consumers were spending more on credit cards.

Some economists said it was possible the increase in credit card spending, which followed the lifting of restrictions related to the Omicron variant, showed a renewed confidence among consumers before Russia’s invasion of Ukraine.