More than 12m people rely on credit to pay for food and bills

MORE than 12m people are relying on credit cards to pay for food or other essential household bills, according to the Government’s financial advice service.

More than a fifth of people have turned to either credit or money from family and friends to pay for food, electricity or gas bills in the past three months, a survey by the Money and Pensions Service found.

One in five people told the service that they would rely on credit to get through the next three months, as their cash savings are wiped out by inflation, which is currently 10.7pc.

Caroline Siarkiewivz, of the Money and Pensions Service, said: “Relying on credit or the generosity of family and friends to put food on the table, heat your home and keep a roof over your head can be a constant source of stress. For millions, it’s also a daily reality.”

Purchases on credit spiked before Christmas, with consumers spending £1.2bn in November, three times higher than the preceding month, according to the Bank of England.

But as reliance on credit levels has increased, so has the cost of borrowing. The average rate for a credit card hit a record high of 30.4pc this month, according to analysts at Moneyfacts.

Meanwhile, millions of homes have struggled to top up credit on their energy prepayment meters.

Around 3m people ran out of credit on their meter last year because they could not afford to top up, according to separate research from the charity Citizens Advice. That equated to one person cut off from their energy supply every 10 seconds, it found. The problem is likely to persist this year, as more than 2m people have been disconnected from their energy provider at least once a month, it said.

One in five has been cut off in the past year, and spent at least 24 hours without gas or electricity, the charity discovered. There has been a 229pc increase in the number of people approaching the organisation for advice in the past year alone.

Dame Clare Moriarty, of Citizens Advice, said: “All too often the people finding it hardest to pay their bills are being forced onto a prepayment meter they can’t afford to top up. This puts them at real risk of being left in cold, damp and dark homes.

“New protections are needed to stop people being fully cut off from gas and electricity. Until then, there must be a total ban on energy companies forcing those already at breaking point onto prepayment meters.”

The Government and Ofgem did not respond to requests for comment.