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Rising living costs have been a topic of conversation on everyone’s lips. Petrol prices, energy bills and increasing food prices matter to UK consumers. With these items increasing rapidly, some people are left with no option but to use their credit cards to keep things afloat. 

According to data published by the Bank of England, it is estimated that UK consumers’ new credit card debt was £1.5 billion in February, which made this the highest monthly figure since the statistics began.

Other forms of consumer credit, such as personal loans and car finance, have also increased to £1.9 billion.

The chart below shows that although there was a dip in customers using their credit cards during a pandemic (between 2020-2021), people were paying back a large sum of their loans back.

This trend has since changed. The figure has started to rise again rapidly, and now we are seeing the pattern that people are reverting to credit cards and other forms of consumer credit borrowing to manage their finances.

Chart: Credit cards and other loans and advances increased rapidly in February 2022.

With these figures rising, debt charities believe that people may now be turning to credit cards and other forms of consumer credit to cover essential living costs.

The Chief executive of Money Advice Trust has said, ‘’Our concern is that more people will be pushed to credit to cover rising bills, which could be storing up problems further down the line when repayments are due.

‘Millions of people are already struggling with the cost of energy, fuel and food – and with April’s energy price rise days away and no respite in sight from other rising prices, this test will only get far harder.’

The government are offering people some respite when energy prices are set to increase this April. In addition to this, we have offered some frugal tips to help lower that petrol expenditure, but is this enough?

Experts believe that the help the government is offering does not still align itself with the rising living costs following Rishi Sunak’s plan outlined in the Spring Statement 2022.

So, can we take matters into our own hands and beat the credit card before it becomes too much of a burden to handle?

Here are some helpful tips if you are now relying on your credit card to keep up with the rise in living costs.

1. Keep a Budget

If you haven’t already done so, create a budget to keep track of your income and expenses. Once the numbers are there in black and white, you can then start looking at possible holes in your expenditure.

You may want to start looking at your TV subscriptions or cutting back on going out. It might sound like a sacrifice, but it will keep those expenses at bay in the long run.

Download our budget planner so you can start getting your finances in order.

2. Ask a friend or family member

If you are struggling with your credit card, it is time to bring in that lifeline. Asking someone close to you might seem daunting, but swallowing that pride could help you tremendously.

They might say no if you are a repeat offender when it comes to money; however, if this is only a one-off occasion, I am sure they would be happy for you to help, rather than lumbered with a credit card exacerbating credit card charges.

They likely won’t charge you interest like other lenders, so it could help you get back on your feet without incurring extra costs.

3. Give the credit card a push

Credit cards are great when you can manage your outstanding balance. They are also fantastic for cashback options for purchases you make; however, if you are making a minimum monthly payment each month and the balance is rising, it is time to reassess that relationship with your credit card.

You can either remove your credit card from your wallet or take the more drastic option and physically cut your credit card up so you are not tempted to use it.

It won’t get rid of your current outstanding balance, but it will make you less reliant on your credit card and push you to look at alternative ways to manage your money.

4. Get help and advice

Sometimes the options are not enough to manage your credit card debt, and like millions of other people in the UK, you are not alone in your debt situation.

It was reported back in September 2021, when restrictions had started to ease, that people were feeling the pressure to spend and go out more and that 3 million people were using high-cost credit to cover essential costs.

Since then, the trend has intensified, and credit card borrowing has risen.

There are different debt solutions to manage your credit card debt which include Debt Consolidation, Individual Voluntary Agreement (IVA) and Debt Management Plan (DMP). Take a look at the debt solutions available and pick the right one for you.

If you have debts of over £5,000, and you're struggling to repay them, get in touch today!

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