Credit cards spending drives up debt figures

Households are spending more on credit cards and putting less money into savings as the cost of living increases.

The Bank of England says net borrowing – including credit cards, overdrafts and personal loans – totalled £1.2billion in November.

The majority of this, it says, was due to additional borrowing on credit cards, which made up £862million of the total - the highest net borrowing on credit cards since July 2020.

People deposited an additional £4.7billion into bank and building society and National Savings and Investment accounts in November – less than half the £11.2billion which went into accounts in the 12 months to October.

Laura Suter, head of personal finance at AJ Bell, said Black Friday discounts and worries about delivery delays and stock shortages had driven up spending in November.

She said: "It's a stark contrast to November 2020, when peopleactuallyrepaid£915million in credit card debt rather than adding to borrowing. It even looks high when comparedtothepre-pandemicDecemberpeakof£681mspenton plastic in December 2019.

"The good savings habits many people got into during lockdown also showed signs of dwindling in November."

Ms Suter said "measly returns" on savings may partly explain why enthusiasm for saving is "wearing thin".

The number of mortgage approvals made to home buyers also fell in November to the lowest level since June 2020. Some 66,964 mortgages were approved, according to the Bank's Money and Credit report – the lowest monthly total since June 2020 but still close to the average of 66,700 in the 12 months to February 2020.