For the first time since June last year, the demand for credit cards, overdrafts and personal loans was more than the amount being repaid by UK consumers.

Credit card debts rose during December

Bank of England figures showed that in December, the demand for consumer credit was up by £52m, driven predominantly by borrowing on credit cards.

Whilst the interest rates have been at a historic low, the trend with consumers has been to pay off their overdrafts, loans and credit card debts.

This was seen during the five consecutive months after June, when repayments outstripped new consumer credit borrowing, however it reversed in December as credit card demands soared.

Whilst the demand for personal loans and overdrafts remained low (repayments outstripped new borrowing by £143m), credit card debts soared by £195m.

Ivan Cooper, Chairman at debt advice experts Chiltern, said: “The fact that more people are using credit cards is slightly worrying, given that this is generally an expensive way of borrowing money.

“It is also concerning as many companies are still announcing further job cuts, so more people will be suffering from redundancy, a drop in household income and potential debt problems.

“As more people will be in need of impartial debt help, they should look for companies displaying the Office of Fair Trading code approval logo – such as Hamilton Locke and Chiltern – as these provide the best standard of service available.”

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