Credit card use soars across the UK, but where do you start if you're worried about debt?

Credit card use is on the rise as everyday costs continue to soar. If you’re feeling concerned about your debts, here’s what you can do.

As the cost of living crisis continues to put pressure on our finances from all angles, new data from the Bank of England shows that British credit card borrowing is growing at the fastest rate in 17 years.

The Bank of England’s report discovered an annual increase of 13% in credit card borrowing in July this year, the speediest yearly growth since October 2005, and people borrowed £740 million more on credit cards in July compared with the previous month. These numbers paint a worrying picture: as prices continue to skyrocket and inflation soars, people are resorting to borrowing to pay for basic essentials and utilities.

A new survey from YouGov on behalf of financial platform Smart Money People presents a similarly bleak picture. Two-fifths of UK adults expect to seek credit over the next year in response to the rising costs of energy, food and fuel, with 43% of those looking to take out new credit already worrying about how they will be able to meet repayment terms. One in 10 of those borrowing in the next 12 months are doing so in order to consolidate existing debt.

In the YouGov survey, credit cards emerged as the most prevalent method, with 34% of prospective borrowers citing it as their preferred option, compared to 17% expecting to choose an agreed overdraft, 15% using buy now, pay later schemes and 12% borrowing from friends and family.

“The fact that the nation is relying more heavily on credit cards, as the latest Bank of England figures reveal, is depressingly inevitable,” says Laura Howard, a personal finance expert at Forbes Advisor UK. “Basic everyday costs have, for many, simply outrun what’s affordable from take-home pay, leaving credit cards as the only payment option left.

“This means that those who already had credit card debt are now tackling a bigger balance. And for those who kept a credit card for ‘emergencies only’ – that emergency has arrived.”

“Credit card debt is the most common type of debt among StepChange clients,” adds Sue Anderson, head of media at debt charity StepChange. “It’s not uncommon for people to resort to using credit cards as a temporary way to try to make ends meet when finances are tight, and then find themselves stuck in an expensive borrowing spiral. Credit cards vary widely as a product but are often most expensive for people with the least financial resilience.”

When your finances feel overwhelming or out of control, it can be difficult to know where to begin to make changes. If you’re concerned about credit card debt, here’s what you can do to start tackling it. 

1. Speak to your bank ASAP

Your bank has a duty to help you

It can be tempting to bury your head in the sand when dealing with financial anxiety and money fears (we’ve probably all done it) but a crucial first step is to pick up the phone and speak to your bank or credit provider.

Yes, they are probably the last people you want to speak to right now but, as Anderson explains, “They have a duty to help you get back on track or negotiate an affordable repayment plan.” That’s because “under rules set down by the regulator, financial providers must treat customers fairly,” Howard says. It’s important to act sooner rather than later because credit card debt will impact your credit score, she adds.

2. Get in touch with a charity

Don’t suffer in silence: a charity “can offer free and impartial debt advice, tailored to your circumstances” online or over the phone, based on your budget, says Anderson.

StepChange, National Debtline and Citizens Advice are among the UK charities that can help, while MoneyHelper is a government-backed platform offering free and impartial financial advice. Though not a charity, PayPlan is another organisation which gives advice and offers debt management plans at no cost.

“Never pay for advice and never share your information with any companies contacting you,” Howard says. “Sadly, it’s when times are hardest that scammers are at their worst.”

3. Break the shame cycle

Despite the fact that it’s a common issue, opening up about credit card debt for the first time can still be tough – it’s something many of us experience, yet few feel totally comfortable talking about even with those closest to us. Shame or worries about what others might think of our financial situation can prevent people from seeking help with their debt, creating a vicious cycle, but it’s important to take emotion out of the situation and remember that “getting into debt isn’t something to be ashamed of, and many people may experience it at some point in their life,” as Anderson puts it.

“Most of the clients that StepChange help have found themselves in debt because of situations which are outside of their control such as life shocks like redundancy or bereavement and, more recently, the cost of living crisis.”

4. Look into the Breathing Space scheme

Also known as the Debt Respite scheme, this government programme was launched last year to relieve some of the pressure on those struggling with debt, so they can focus on dealing with their financial situation and setting up a plan to deal with repayments.

There are two types of breathing space: if you pass the eligibility checks, the standard programme pauses enforcement action from creditors and freezes interest and other charges on your debt for a period of up to 60 days.

The second type is available to those who are receiving mental health crisis treatment, as certified by an approved mental health professional, and lasts as long as the treatment, plus 30 days on top of that. 

Speak to a Financial Conduct Authority registered financial adviser before taking financial advice, and think carefully before making any decision.

If you’re concerned about debt, please get in touch with Step Change. If you’re worried about your mental health, you can contact Mind or Samaritans. 


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