Consumer credit levels have risen to the highest level since December 2008 according to the latest data released by the Bank of England.
The level of personal debt recorded in the year to 30th November 2016 grew by 10.8 per cent, the highest since just after the global financial crash of 2008.
The data including credit cards and bank loans, but discounting student loans and mortgages has been growing year on year at around 10 per cent for the past six months.
Bank of England Governor, Mark Carney, has warned about the high personal debt level in UK households, and debt counsellors believe that many people are using credit cards to pay for essential living costs rather than just luxuries.
Inflation is forecast to rise in 2017 which will only make the situation worse for those in personal debt.
Debt charity Step Change has called on the government to introduce a scheme whereby debtors would be given a 12 month ‘breathing space’ offering protection from interest, penalty charges and enforcement actions while they sort their finances out.
A similar scheme was introduced in Scotland in 2004 whereby debtors agree a formal debt management plan setting out payments in return for the protection, however in England and Wales such protection only becomes available once the debtor has become insolvent.
The government has yet to make a decision on any such scheme.