£2.2m piled on to Virgin credit card deals every day

MORE than £2.2m a day was piled on to Virgin Money credit cards in the last three months as the industry was accused of fuelling a debt binge.

The challenger bank said its credit card balance grew by £200m in the first quarter to £2.7bn, as it set its sights on reaching £3bn by the end of the year.

Chief executive Jayne-Anne Gadhia said Virgin Money worked hard to make sure customers who took out credit cards with the bank could manage their debt.

But banks have been under intense scrutiny from the Bank of England which has warned about a surge in risky lending.

In the UK 3.3m people are in persistent debt, and the latest figures have revealed credit card debt hit a record £67.3bn in February – an annual growth rate of 9.3pc.

It prompted the Financial Conduct Authority to unveil proposals that would force lenders to help customers struggling with debt.

Gadhia said Virgin Money had already tightened its lending criteria for its credit card business, requiring borrowers to have £750 of disposable income at the end of the month. But it is among the firms to offer attractive deals such as 41 months interest free on balance transfers – although Gadhia said just 18pc of customers took this deal.

And of the people who applied for a credit card, just 42pc were approved.

James Daley, managing director of debt campaign group Fairer Finance, said: ‘The level of borrowing in the short term credit market, particularly in credit cards, is a ticking time bomb. Going into the credit crunch in the last recession credit card borrowing was at these kinds of dangerous levels.’

Peter Tutton, head of policy at StepChange Debt Charity, said: ‘As credit card borrowing has been growing strongly, we are particularly concerned that what are supposed to be shortterm lending products become longterm problems in too many cases.’

Shares closed yesterday up 0.7pc or 2.2p to 325.3p.