The Bank of England has stated that families used credit cards more last month than at anytime since the 2008 financial crash.
Although we are barely in the lead up to Christmas, it is believed that families have already been taking advantage of low interest rates to purchase holidays, clothes and cars. This increase in borrowing has been welcomed by the high street but it is feared that consumers may be building up debts that they cannot afford.
The Bank of England cut interest rates in August from 0.5% to 0.25% in an effort to stimulate the economy. With interest rates so low there is little appeal to save money in a bank account and so the low interest rates encourage spending. Economists have welcomed this news although there is concern that if interest rates start to rise again, many households will be unable to repay their debts. Credit cards are already the most popular method of obtaining credit. With this increased credit card lending there is a risk that many more households will fall into financial difficulties in the near future.