Consumer borrowing reaches highest level since 2005

Consumer borrowing has reached its highest level since 2005, largely due to the cost-of-living squeeze driving reliance on credit.

Research from Vanquis Bank ascertained that one in 10 (11%) of people took out additional credit as a result of the difficult economic conditions.

It further found that 82% of people are concerned about the rising cost of living and 72% of people are having to make changes to their financial behaviour due to the cost of living.

Almost half (43%) of people were unsure how the rising costs will impact them. Of 18-34 year olds, that figure increased to 53%.

Three-fifths (60%) said support with the rising cost of living would be useful, although more than half (55%) didn’t know how to access it.

Fiona Anderson, Managing Director of Cards at Vanquis commented: “The cost-of-living crisis is a huge concern for many people. The financial services industry has a duty to consider how it is impacting customers and provide tools to help people at this difficult time.

"Vanquis has launched a free-to-use cost of living calculator to help customers understand how rising costs might impact their finances, along with practical money saving tips to give people ideas on how to reduce their bills." 

With the news that the Bank of England (BoE) will again raise interest rates, experts are concerned that there will be further pain to come.

StepChange Debt Charity’s director of external affairs Richard Lane said: “Taken together, today’s rate rise and the FCA’s reminder to firms to treat their customers fairly suggest that the cost of living crisis still looks set to get worse before it gets better, even with the support measures that the Government has so far announced.”