The cost of living crisis means that households are increasingly reliant on credit cards to help make ends meet, despite the fact credit card rates are at their highest level for nearly 30 years.


Outstanding balances on credit card accounts grew by 9.5% in the 12 months to April, according to latest data from UK Finance, the trade body for the banking sector. There were 326.4 million credit card transactions in April, 1.4%more than in April 2022.

Kevin Brown, savings specialist at Scottish Friendly, said; “Rising credit card debt is a clear warning sign that household budgets are being stretched as inflation remains high and interest rate rises push up people’s mortgage costs.

“It is becoming harder for families to make ends meet and for those individuals without savings to rely on then borrowing money may be one of their only options.

Car finance - get a free quote today, unlimited buy back offer, 9.9% APR

Compare travel insurance quotes and save

What is a Lasting Power of Attorney?

“But the cost of borrowing is considerably higher than this time a year ago, so it’s really important to shop around to find the best deals and consider prioritising paying down debts before saving or investing any money.”

More like this

Keeping credit card costs down

Average credit card rates rose from 22.76% to 23.10% last month, their highest level since December 1995.

If you’re considering taking out a credit card to help cover living expenses, you should therefore make sure you choose one with a lengthy 0% period on purchases, so that you can pay down what you owe without being hit by steep interest charges.

For example, NatWest’s Credit Card has a 23-month 0% introductory period for new cardholders, so you won’t pay any interest on your borrowing for the first 23 months. You must, however, make sure you pay off what you owe within this period, as when it finishes, the card charges a representative annual percentage rate (APR) of 23.9%. Similarly, Barclaycard’s Platinum card also has a 23-month 0% introductory rate. Once this ends, the APR shoots up to 24.9%.

If you’ve already run up debts on a credit card, and are paying high interest charges each month, it’s worth seeing if you can move your balance to a balance transfer card which again has a long 0% introductory rate. That way you can aim to clear your debt without having to worry about paying interest on what you owe.

Top best buy balance transfer cards currently include NatWest and RBS’s 30-month balance transfer cards, which have a 2.99% balance transfer fee, and M&S Bank’s 28-month balance transfer card which also has a 2.99% fee. Both these cards have a 23.9% representative APR when the 0% introductory periods finish.


The good news is that there are signs that people may already be turning to interest-free cards to help keep interest charges to a minimum. The UK Finance data shows that even though credit card balances have grown, less than half (49.6%) of outstanding balances incurred interest in the 12 months to April this year, compared to 51.3% twelve months ago.