UK credit card borrowing rises at fastest annual rate in almost two years | Borrowing & debt
Credit card borrowings rose at the fastest annual rate in almost two years in November. Bank of EnglandHouseholds borrowed to finance the rising cost of Christmas.
In a snapshot covering the month of Rachel Reeves’ much-anticipated autumn budget, the central bank said individuals were borrowing an additional £2.1 billion in consumer loans, compared to an increase of £1.7 billion in October.
Net borrowing on credit cards rose to £1bn from £700m a month ago. Borrowing using other types of consumer credit, including car dealership finance and personal loans, rose by £100 million to £1.1 billion.
The annual increase in credit card borrowing increased from 10.9% in October to 12.1% in November. This rate is the highest rate since January 2024.
Experts said the figures may reflect people taking on more debt during the crucial pre-Christmas shopping period as households come under increasing pressure from the rising cost of living.
Simon Trevethick, of debt charity StepChange, said: “For many households, the increase in consumer credit borrowing in November may reflect the fact that everyday costs are becoming harder to manage without resorting to credit.
“The increase may also indicate people are taking on more debt in preparation for the festive period; our own survey found 14 million people are struggling to afford Christmas.”
Although the UK’s annual inflation rate has fallen to 3.2 per cent, it is still above the official 2 per cent target and prices are significantly higher than in recent years. Consumers paid more for holiday treats compared to last year following a sharp rise in food prices.
Separate figures from the British Retail Consortium (BRC) show annual shop price inflation rose to 0.7% in December from 0.6% in November.
The increase was due to food price inflation rising to 3.3% from 3% in November. This was offset by a decrease in non-food prices, which fell by 0.6% compared to the same month of the previous year, due to high discounts from retailers.
Helen Dickinson, chief executive of BRC, said: “Shoppers are still finding plenty of value in Christmas must-haves such as produce, cheese and alcohol, helping households enjoy the festive season.
“Promotions were also common across popular gift categories including toys, books and home entertainment.”
British consumers have shown reluctance to spend in late 2025 amid intense speculation about tax rises in the Chancellor’s budget. Official figures show retail sales volumes fell an unexpected 0.1% in November. A study by accounting group KPMG also found that concerns about the health of the economy are holding consumers back.
Economists said the rise in consumer loans could signal an early rise in confidence among households in borrowing to finance their spending. But household deposits with banks and building societies increased by a further £8.1bn in November, from £6.7bn in October.
Net mortgage approvals for home purchases fell by 500 to 64,500 in November, reflecting a pre-budget slowdown in the UK property market.
Alex Kerr, a British economist at consultancy Capital Economics, said the rise in bank deposits may reflect people reorganizing their finances in anticipation of tax changes in Reeves’ budget. But the increase was much smaller than the £20.2bn rise in deposits seen in October 2024, ahead of the Chancellor’s first autumn budget.
“This suggests that concerns about upcoming tax increases did not discourage consumers from borrowing in November,” Kerr said. “Overall, today’s announcement strengthens the evidence that speculation about tax rises ahead of the November budget has not had much impact on household spending decisions. It also suggests there is not much room for a rebound in consumer spending in 2026.”
