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‘No room for complacency’ as consumer credit hits £205bn

Consumer credit has grown nearly 10 percent in the year to October 2017 – with outstanding balances now at more than £205bn.


Amber-Ainsley   Pritchard

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The statistics were published by the Bank of England in its latest monthly Money and Credit report this week (November 29).

 

The report found that the outstanding balances of credit card debts has increased by eight percent from this time last year, to £69bn, and for other loans and advances the figure increased 10 percent – to £135bn.

 

Joanna Elson OBE, chief executive of the Money Advice Trust, said: “With rising living costs, low wage growth and a rise in interest rates contributing to a squeeze on many household’s budgets, there is no room for complacency. A rise of 9.6 percent in consumer credit growth when wage growth is at 2.2 percent is clearly a worry.

 

“Many families are already struggling to make ends meet, and with Christmas fast approaching, we encourage people to exercise caution before taking on additional borrowing and to consider how they would be able to cope with repayments in the event of a shock to their income.”

 

Peter Tutton, head of policy at StepChange Debt Charity, said: "The fact that nine million people are currently using credit in order to cover essential costs should put tackling problem debt high on the policy agenda.

 

"Household financial stress and growing consumer credit create a pocket of risk which policy action can help to close. Regulators need to ensure consumer credit lending is responsible and affordable for households; and with the government now committed to introducing a Breathing Space scheme to help people manage problem debt, it’s crucial to get it right and into existence as soon as possible.”

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