Credit card borrowing sees sharpest rise since 2023

This increase almost exclusively contributed to the overall jump in consumer credit borrowing by individuals during the month – rising from £1.1bn to £1.7bn between December and January.

When broken down by type, credit card net borrowing rose from £400m to £1.1bn, while net borrowing through other forms of consumer credit remained steady at £700m.

The annual growth rate for all consumer credit, however, decreased slightly from 6.5% to 6.4%. Over this same period, the annual growth rate for credit card borrowing increased – jumping from 8.1% to 8.5% – while for all other forms of consumer credit it fell from 5.8% to 5.5%.

Reflecting on the jump in credit card spending, Richard Pinch, senior director of risk at financial services consultancy Broadstone, said: "It suggests that the new year brought some fresh optimism among consumers amid a more positive interest rate outlook.

"However, with cost-of-living pressures still wearing down disposable incomes and April set to see a variety of tax increases that could exacerbate cost pressures for households, it’s vital that lenders support consumers in selecting the most appropriate credit solutions for their personal circumstances."

Net borrowing of mortgage debt by individuals also saw an uptick – increasing by £900m to £4.2bn. This followed an increase in net borrowing of £1.1bn in December.

Additionally, the annual growth rate for net mortgage lending rose 0.3 percentage points from 1.5% to 1.8%. This continued an upward trend seen since last April.

Gross lending, meanwhile, remained little changed in January at £21.3bn – however, gross repayments fell by well over £2bn, decreasing from £18.5bn to £16.3bn.

Alongside this, net mortgage approvals for house purchases decreased by 300 to 66,200 in January – following an increase of 400 in December. However, approvals for remortgaging increased by 2,200 to 32,900, after falling over the previous two months.

Household deposits, meanwhile, increased by £8.4bn following net deposits of £4.7bn in December. This was driven by households depositing an additional £5.4bn and £2.2bn into interest-bearing sight accounts and ISAs.

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