The amount consumers owe on credit cards is growing at its fastest rate since 2006, according to new figures from UK Finance.
The trade body reports that credit card debt grew by 8.3% over the past year, reflecting the rise in the number of card transactions and contactless payments.
Separate data on card borrowing from high street banks showed annual growth of 6.3%.
There were 220 million credit card transactions in the UK in February alone – a rise of 3.3% compared to the same month a year ago. Some £9.6 billion was spent on credit cards in the year to February 2018, up by 8.9% year on year.
At the same time, overdraft debt was down 14.1% to £6.5 billion and the amount owed in personal loans was down 2.3% to £1.6 billion.
The Financial Conduct Authority has already voiced concerns about rapidly rising credit card debt, particularly as up to two interest rate hikes are expected this year. It is introducing new measures on 1 September to encourage borrowers to pay back their debt faster.
Households are also saving less than they were a year ago too, with consumers typically saving just 5.2% of their earnings – down from almost 10 per cent in 2015. Experts say it is a sign that consumers are feeling squeezed by inflation and less confident about spending.
The household debt-to-income ratio climbed to 133.9% a year as borrowing and inflation have outpaced earnings growth. Some 92% of that is mortgage debt – with mortgage lending up 4.9% to £19 billion in February as households look to take advantage of rock-bottom interest rates.
Eric Leenders, managing director at UK Finance, says: “We are also seeing a continuing rise in credit card spending, reflecting the number of transactions carried out using credit cards, while other forms of borrowing such as overdrafts continue to fall."