Britons Turn To Cards As Christmas Costs Bite

Brits increased their use of credit cards in November at the fastest annual pace in almost two years, the Bank of England figures show — a shift many point to as households stretch to cover festive bills. In a snapshot covering the month before the autumn budget, consumer credit rose by £2.1bn, up from £1.7bn in October. Net borrowing on credit cards accounted for £1bn of that increase (versus £700m the month before), while other types of consumer lending — such as dealership finance and personal loans — rose by £100m to £1.1bn. Year-on-year growth in credit card balances climbed from 10.9% in October to 12.1% in November, the strongest since January 2024. Commentators say timing points to pre-Christmas pressure. Simon Trevethick of the debt charity StepChange warned many households are turning to borrowing because everyday bills are harder to manage, and noted separate polling that suggested 14 million people would struggle to afford Christmas. Food prices have jumped sharply over the year, and even though inflation has eased to 3.2% it remains above the Bank’s 2% goal, leaving shoppers feeling poorer than before. Yet the picture isn’t simply one of recklessness. Households also increased their deposits with banks and building societies by £8.1bn in November, up from £6.7bn in October. That simultaneous rise in saving and borrowing suggests people are reorganising finances — perhaps keeping a buffer while using credit to smooth short-term spending. The housing market showed signs of cooling ahead of the budget: mortgage approvals for house purchases fell by 500 to 64,500 in November. Economists caution that the mixed data point to a cautious consumer mood rather than a spending boom. Alex Kerr of Capital Economics said the extra deposits may reflect preparations for tax changes in the chancellor’s budget and that the November borrowing does not look like a broad-based pickup that would drive stronger consumer spending next year. He added the increase in deposits was far smaller than the large jump seen in October 2024, suggesting only limited nervous hoarding. Retail sales volumes also surprised on the downside, edging down 0.1% in November, and a KPMG study found household worries about the economy were dampening shopping confidence. The result is a balancing act for many families: using credit to fund a pricier festive season while trying to hang on to some savings — a financial seesaw that could temper spending in 2026. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.theguardian.com | Read original article