The amount of money Britons owe on their credit cards has surged by £4.5 billion in a year to £64.775 billion.
The rise, which equates to 9.5 percent, suggests more of the nation are effectively living on borrowed money.
Industry experts warn that much of this credit card spending is on essentials, rather than luxuries, and some are even putting rent and mortgage bills on plastic.
The figures, which come from industry trade body UK Finance, show that some 50 percent of the total balance is running up punishing interest charges which can be as high as 30 percent.
There were 329.8 million credit card transactions in February, 8.6 percent more than in the same month last year.
At the same time, total credit card spending was £18.8billion – 8.9 percent higher than February 2023.
Simon Bridgland, Broker/ Director at Release Freedom, said: “The level of personal debt some clients are paying is vast.
“Many of my clients clear less than half their balances each month and so they have no choice but to stay with the current lender, in a no-questions-asked scenario.”
Riz Malik, Director at R3 Mortgages, told Newspage: “This data is not surprising. People are relying on their credit cards to supplement their daily expenditure as the cost of living crisis continues and higher interest rates apply serious pressure.
“What is even more concerning is the cost of borrowing on cards seems to be creeping up as well, leaving people close to entering a debt spiral. It will be interesting to see what happens to credit card rates when rate cuts appear.”
Michelle Lawson, Director at Lawson Financial, suggested some banks and credit card firms are allowing people to run up big debts without proper checks on their ability to make repayments.
Sne said: “More money on plastic is completely unsurprising giving the rising costs of living and higher interest rates.
“Many of the borrowers I deal with have far more unsecured debt these days, often worrying amounts, which they are then looking to consolidate into their mortgage.
“The regulator should really look at how borrowers can rack up such dangerous amounts. Some lenders will approve multiple loans and credit cards for an applicant with no or little protection or affordability for the more financially vulnerable.”
Ben Perks, Managing Director at Orchard Financial Advisers, said: “For many, managing the monthly finances has turned into a white knuckle ride over the past 18 months.
“It is therefore unsurprising that credit card balances are rising. Unfortunately, this rise in balances isn’t due to lavish spending and extravagant lifestyles. It’s just day to day living.”
He added: “The leading debt charity Step Change reported that 1 in 4 borrowers are using credit to pay mortgage payments.
“Until the cost of living crisis eases and rates come down, this will continue and most probably worsen. The alarm bells are almost deafening but it seems the Bank of England cannot hear them.”
Justin Moy, Managing Director at EHF Mortgages, warned: “This is just the tip of the credit iceberg, with many borrowers using unsecured credit to pay basic bills and keep up with rent and mortgage payments.
“Also, with 0 percent balance transfer options dwindling, the need to consolidate onto mortgage borrowing has never been so prevalent, as borrowers look to avoid 30 percent card interest rates.”
Dariusz Karpowicz, Director at Albion Financial Advice said the credit card debt boom is further evidence of a squeeze on household budgets.
“Unfortunately, this increase isn’t from exuberant spending but from the costs of day-to-day living.” he said.
“It’s a troubling trend that highlights the growing financial pressure on households and underscores the need for careful financial planning and management.”
How to avoid common credit card mistakes
Recent research from Compare the Market found that eight in ten credit card users admit to making common and easily avoidable mistakes.
Withdrawing cash using a credit card (37 percent), only making the minimum repayments (35 percent), and getting close to or reaching your credit limit (34 percent) were found to be the most common credit card mistakes.
According to this research not paying off your credit card balance in full each month is the most expensive mistake.
Almost one in three (32 percent) have made this error – typically having to pay £194 in interest payments as a result.
Andy Hancock, Money Expert at Compare the Market, gave his advice for people looking to avoid these pitfalls: “It’s important to not get caught out by common mistakes when using a credit card, which could cost you more in fees or interest repayments and have a negative impact on your credit score.
“If you can afford to, it’s always best to pay off your credit card balance in full every month. That way you’ll avoid having to pay interest. At the very least, you must make the minimum monthly payment. Setting up a direct debit payment could help ensure you pay on time.
“If you’re struggling to pay you might be able to reduce repayments, or prevent having to pay more interest, by switching from a standard APR card to a card with an interest-free period.
“You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card. It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”
