Credit card debt growing at fastest rate in 17 years

The annual growth rate of credit card borrowing was 11.6 per cent in April, the highest since November 2005, while the annual growth rate for other forms of consumer credit was 3.4 per cent, the highest since March 2020.

The figures – which analysts say highlights households falling into financial difficulty and points to a possible recession – are included in the Bank’s money and credit report for April 2022.

Individuals borrowed an additional £1.4 billion in consumer credit in April, on net, following £1.3 billion of borrowing in March. This is the third consecutive month where borrowing has been higher than the 12-month pre-pandemic average up to February 2020 of £1 billion.

The additional borrowing in April of consumer credit was split between £0.7 billion on credit cards, and £0.7 billion through other forms of consumer credit, such as car dealership finance and personal loans.

The effective interest rate on interest-charging overdrafts in April fell by 23 basis points to 20.07 per cent. Rates on new personal loans to individuals rose by 60 basis points to 6.52 per cent in April, though this was still 38 basis points below the pre-pandemic level. The effective rate on interest bearing credit cards was 18.08 per cent in April, 47 basis points below the February 2020 level.