UK consumers are increasingly purchasing goods on plastic with the number of transactions on credit and debit cards jumping 12 per cent in the last year.
The increase was the fastest annual rise in the number of card transactions since 2008 and comes after warnings from the Bank of England about the growth of personal debt.
Shoppers spent 7.2 per cent more on all types of cards in the year to the end of June, despite real wages falling over the period, data from industry body UK Finance showed.
The total value of credit and charge card purchases increased 6.9 per cent over the 12 months with credit card lending accelerating in April, May and June to an annual growth rate of 9 per cent.
During those three months, the number of people defaulting on their credit card bills and personal loans “increased significantly”, the Bank of England said in a recent report.
The rise comes as official figures show real earnings have declined. Average pay rose at an annual rate of 2.1 per cent in the three months to June - well below the inflation rate of 2.6 per cent in the year to the end of June.
Overall consumer spending was up 1.3 per cent in the year to July, the Office for National Statistics said in a separate release this month.
Peter Tutton, head of policy at StepChange debt charity, expressed concern at the findings.
“With our research estimating 3.2 million people are using credit cards to pay for everyday household expenses, the growing stock of credit card debt should focus attention on households in financial difficulties,” he said.
Mr Tutton said the growth in credit card cash advances was particularly worrying. This type of borrowing is expensive and can be a warning sign that borrowers are facing financial difficulty.
He added: “The Financial Conduct Authority must ensure credit card lenders are acting responsibly, making robust affordability checks and intervening quickly to help people struggling with credit card or multiple credit card debts.”
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