The UK is set to borrow an additional £9bn on credit cards over the next six months to survive the cost-of-living crisis, a new report by subscription lender, Creditspring, has suggested.

According to the most recent figures published by the Bank of England, individuals in the UK are currently borrowing £1.5bn every month on credit cards. This borrowing is projected to increase the UK’s total credit card bill by 18% to £68.9bn as living costs and inflation soar.

Given these figures were announced before Russia’s invasion of Ukraine pushed energy prices up, Creditspring suggested that borrowing is likely to increase in the coming months, with the lender’s research indicating that credit cards remain the most popular form of borrowing.

Monthly debt repayments have jumped 9% in a year and the total balance of unsecured loans among people applying for credit has increased by 13% year-on-year, according to Creditspring’s customer application figures.

While the rising cost-of-living is piling pressure on households across the UK, the lenders research also highlighted its impact on vulnerable households and younger people. One in four (39%) people living on incomes under £10,000 per year are “terrified” for their financial future, the study found, while almost half (46%) of 18 to 34 year-olds said the same – a figure up from 29% last year.

“Credit cards are going to provide a lifeline for borrowers over the next few months,” said Creditspring co-founder and CEO, Neil Kadagathur. “However, with millions reliant on borrowing to survive, credit cards with high repayment terms and large risk of debt spirals are a high-risk option that could lead to increased debt for many households.

“With millions across the UK having no option but to borrow if they’re going to survive what will be an incredibly tough few months, ensuring that all households have access to affordable credit is vital.

“Currently, there are up to 15 million people in the UK struggling to access mainstream credit options – these are the individuals most at risk from unscrupulous lending practices and falling into debt. Lenders have to offer more support to borrowers and step up to offer the support that will be a lifeline over the next couple of months.”

Share Story: