Unsecured borrowing — mostly through personal loans and overdrafts — soared to £732 million in May, according to a recent article in the Guardian.
The figure is nearly two times the £379 borrowed in April.
Personal loans and overdrafts accounted for £603 million of consumers’ unsecured borrowing throughout May, while credit card borrowing comprised only £70 million.
Some experts speculate households may be relying on loans to pay for basic needs.
“With inflation continuing to outstrip earnings growth, it takes more and more of our income to put food on the table, travel to work and power our homes,” says Joanna Elson, chief executive of the Money Advice Trust. “As a result, people have cut back on their spending significantly. However, some find they can’t cut back any more, and are borrowing to bridge the gap.”
Howard Archer, chief UK economist at IHS Global Insight, says the increase “may have been affected by some people having to borrow more as a consequence of the extended squeeze on their purchasing power.”
Information from this post was taken from an article by Hilary Osborne, editor of the Guardian’s money site. Read her original article here.