As Britain’s credit card debt hits £17.1 billion, shoppers are being warned about the consequences of ‘binge borrowing’ and paying for Christmas on plastic.
Statistics from UK Finance have revealed the record debt mountain last month showed credit card spending 11.6% higher than last year.
Charities are warning that families risk being caught in a debt trap if they binge buy at Christmas and then their financial circumstances suddenly change.
Debt charity StepChange said that a rise in credit card spending over the festive period could mean storing up problems for the economy.
Bigger debt burden
Grace Brownfield said: “‘Unless someone’s income increases soon afterwards, the routine use of credit for everyday living expenses can trap people in a bigger debt burden very quickly.
”If people struggle to pay essential bills one month, they may well struggle the next month, and so on, as the high interest and charges from borrowing credit builds up on top of their bills.
Creditors, utilities providers and landlords may be paid for now, but it is unlikely to be sustainable and may be storing up problems for customers in the future.’
Debt expert Justin Modray added: “Shoppers should be very careful to keep tabs on their spending and ensure they do not borrow more than they can afford to pay off.
“Interest rates on some credit cards can be sky-high, so you should only be using them to make everyday purchases if you are comfortable you will be able to repay it. The risk is you end up building a large amount of debt over time.”
No money to spare
Separate research from Lloyds Banking Group (LBG) has revealed that 60% of people who are not saving feel they have no money to spare and are faced with the problem of how to pay for Christmas.
The survey revealed that the average Briton saves just £100 a year – the lowest savings rate since 1999.