Britain saw the biggest surge in consumer debt for seven years in November when we borrowed £1.25 billion in a single month on credit cards, loans and overdrafts.
The news comes as millions of households await the arrival of their first credit card bills of the new year, detailing their Christmas spending. Consumer helplines are already warning many of us will be struggling to make ends meet.
Bank Of England figures show that November saw the highest rise in unsecured borrowing since the dark days of the 2008 financial crisis when the credit crunch took hold. The phenomenon of Black Friday is credited with fuelling some of the increase as Britons went shopping crazy with £810 million spent on-line alone.
Analysis of the figures show £980 million taken out in loans and overdrafts – a massive £252 million more than the previous year. Credit card lending dropped by £130 million from October, but still contributed £269 million to the overall total.
Now the fear is that many households, already working to tight budgets, will start to find it impossible to make ends meet.
Research by R3, which represents those who work in the insolvency sector, shows half of those planning to borrow money to pay for their Christmas used an existing credit card. Overdrafts provided the money for 24% and a further 14% relied on store cards.
But the most worrying figures showed 11% had decided to skip their normal spending commitments – like their mortgage payment – and 8% took out a payday loan.
Ray Davies of Citizens Advice said they normally see a 30% spike in people with debt worries in the second half of January and into February as the credit card bills start to arrive.
He said: “Often the festive period will tip people already struggling with debt over the edge. There’s a lot of temptation to spend money that you don’t have. Debt will not go away. It will fester and the earlier you deal with it the easier it is to find a solution to the problem.
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