Brits splurge on credit cards as spending hits all-time high

MasterCard credit cards are seen in this illustrative photograph shot December 8, 2010. REUTERS/Jonathan Bainbridge/Illustration/File Photo
MasterCard credit cards are seen in this illustrative photograph shot December 8, 2010. Photo: REUTERS/Jonathan Bainbridge/Illustration/File Photo

Spending on UK credit cards hit an all-time high in July as Brits splurged on credit ahead of Brexit.

According to new figures from the trade body for UK banking and financial services UK Finance, £12bn ($14.6bn) was spent using credit cards in July. The total was 8.2% more than in the same month a year earlier and represents an all-time high.

The findings may fuel fears that the UK economy is being propped up by an unsustainable consumer spending bubble. Consumer spending has been a key driver of GDP growth in recent years but have been spending more than they earn fro a record nine consecutive quarters.

Data published earlier this month showed that UK wages were growing at the fastest pace in 11 years, which may help to ease pressure on consumer finances.

UK Finance, which represents over 250 major banks and finance firms, noted that credit card repayments also hit a record high in July, “showing that consumers are managing their finances effectively overall.”

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Overall, credit card borrowing grew by 3.8% in the year to July 2019. Personal loans and overdraft spending also rose in the month, by 9.3% and 1.7% respectively.

UK Finance said mortgage lending grew by 2.9% to £26.1bn in July and the main high street banks approved 95,126 mortgages, the highest number since July 2009. Home purchase mortgages rose by 16.4%, remortgage approvals rose by 19.4%, and approvals for other secured borrowing were up by 12.7%.

Personal deposits grew by just 1.6% in the year to July 2019.

The findings are based on data from Barclays, Lloyds, HSBC, RBS, Santander UK, TSB and Virgin Money, as well as Bank of England data. The figures are adjusted to account for population changes and other factors that could skew the data.