Today’s data from the Bank of England shows that consumer credit growth rates continued to slow in May, but remains rapid relative to 2009-12. Although net lending fell slightly on the month, at £1.4 billion, it was in line with the average amount borrowed monthly over the past year. The decrease was driven by a fall in the amount of other loans and advances (which includes personal loans, overdrafts and car finance), with credit card lending rates remaining broadly the same.
Peter Tutton, Head of Policy at StepChange Debt Charity said: “It’s encouraging to see consumer credit growth stabilise, and we must not become complacent with tackling and preventing problem debt affecting the most vulnerable households, as the FCA observed they faced higher overdraft charges in their retail banking review earlier this week.
“Whilst this month has seen a decrease in unsecured borrowing excluding credit cards, we must not lose sight of the impact of sustained pressure on already stretched household budgets in coping with the rising daily cost of living. We estimate 1.4 million people are using high cost credit for everyday bills, which highlights the urgency for developing and supporting affordable credit alternatives which can help vulnerable households manage periods of financial instability without plunging them into persistent problem debt.”