Three charts that show Britain’s borrowing binge isn’t over as growth in credit card debt hits 11-year high

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The Bank of England has announced that its main banking regulator is conducting a review into lending standards as policymakers attempt to ward off a consumer debt bubble. CREDIT: ALAMY

Credit card debt grew at the fastest annual pace in more than a decade in February, as low interest rates encouraged Britons to binge on cheap credit.

Borrowing on credit cards and personal loans rose by £1.4bn last month, according to Bank of England data.

While this was below the six month average of £1.6bn, it was higher than expectations of £1.3bn. Upward revisions to January’s borrowing figure also kept the annual pace of growth at 10.5pc.

Consumer credit has grown at a double digit pace for almost a year. Source: Bank of England

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Chart type: line chart.
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The chart has 1 Y axis displaying Annual unsecured net consumer credit growth.

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Annual unsecured net consumer credit growthConsumer credit has grown at a double digit pace foralmost a yearSource: Bank of England19952000200520102015-505101520Highcharts.com

Credit card debt rose to a fresh record of £67.3bn in February, while the annual pace of growth climbed to 9.3pc – the fastest pace since February 2006.

The Bank of England has announced that its main banking regulator is conducting a review into lending standards as policymakers attempt to ward off a consumer debt bubble.

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Growth in credit card debt rose to an 11 year high in February. Source: Bank of England

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Annual growth in credit card debtGrowth in credit card debt rose to an 11 year high inFebruarySource: Bank of England19952000200520102015051015202530Highcharts.com

Record low interest rates and action by policymakers to boost lending in the wake of the Brexit vote have helped to drive consumer borrowing costs down.

Bank data show the interest rate on a £10,000 unsecured loan dropped to 3.66pc last month, the lowest rate since records began in 1995.

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The average interest rate on a £10k loan has fallen substantially in recent years. Source: Bank of England

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The chart has 1 Y axis displaying Average interest rate paid by households on £10k loan.

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Average interest rate paid by households on £10k loanThe average interest rate on a £10k loan has fallensubstantially in recent yearsSource: Bank of England1995200020052010201505101520Highcharts.comSaturday, Mar 31, 2001● Rate: 11.7pc

Mark Carney, Governor for the Bank of England, has warned that a broader “easing of credit standards” on unsecured lending posed a potential risk to financial stability.

This includes a marked rise in interest-free periods on credit card balance transfers, which have lengthened to up to 40 months in some cases, he said.

Policymakers will be monitoring credit growth closely as higher inflation erodes real incomes and contributes to a slowdown in the economy.

The Bank will review the findings by the Prudential Regulation Authority “over the coming months”, which could lead to tighter lending criteria.

The Bank of England data also showed mortgage approvals dipped to 68,315 in February, from 69,114 in January, suggesting that housing market activity remains subdued

source”cnbc”