Credit Cards funded UK summer spending spree
Industry figures have revealed that credit card lending is rising at its fastest pace since February after the summer’s hot weather boosted retailers.
The figures from UK Finance show that credit card spending has increased by almost 8 per cent from the same period last year, a development which some believe will increase fears of financial overstretch ahead of Brexit.
UK Finance, who represents many of the major banks, reported that levels of card borrowing grew by 5.8 per cent last month compared to this time last year, although overdraft borrowing decreased by 7.2 per cent.
Bank of England figures up to July, had suggested total credit card lending had been falling though it stood at an 8.9 per cent annual rate of growth.
Figures were released amid separate data following a surge in retail sales during July and August as consumers splashed out during the hot summer following months of quiet on the high street.
The favourable weather has been credited for increasing UK economic growth following on from the damage caused by the cold snaps in the ‘Beast from the East’.
An increase in gross domestic product (GDP) since winter led to the Bank of England raising interest rates last month, a move that has caused a rise in borrowing costs in the process.
The rise in fuel and energy prices are thought to be showing signs of putting pressure on inflation and household spending power.
Policymakers have voiced concerns about household debts but those concerns have quickly been rebuffed by economists who have pointed out record employment levels to give comfort.
Peter Tyler, director at UK Finance, said: “Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.
“However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”