July 22: Fifth Of Adults Increase Borrowings As Credit Card Rate Rise Looms
Consumers are taking on more debt than a year ago, according to data released by the Office for National Statistics (ONS), writes Bethany Garner.
It found that 21% of adults borrowed more money or took out more credit in June 2022 than they did in the same month last year. A further 46% said they will not be able to save any money in the next 12 months.
These higher levels of borrowing and lower levels of saving come in the midst of the ongoing cost-of-living crisis, which saw UK inflation reach a 40-year high of 9.4% in June.
As the cost of essentials such as energy, housing and food continue to climb, consumers are more likely to take on debt to make ends meet.
The ONS survey also found that 29% of adults experienced difficulty paying their household bills last month. Gas and electricity bills proved a particular pain point, with 46% of adults responsible for these bills saying it was ‘somewhat’ or ‘very’ difficult to pay them.
At the same time, the cost of credit is set to rise later in the year. Royal Bank of Scotland (RBS) announced this month it will be raising interest rates by up to 3 percentage points for some customers in September.
Assuming an initial APR (annual percentage rate) of 12.90% (the current rate for RBS’ The Royal Bank Credit Card), this rise would equate to an increase in monthly interest payments of £1.63 on a balance of £100,…
