There are worrying signs that we could be heading for another big financial crash, ten years after Northern Rock had to be bailed out. There are concerns that the bubble could be about to burst yet again. New figures, released this week, show spending on credit, debit and charge cards is growing at the fastest rate since 2008. According to the banking trade body, UK Finance, the number of card transactions increased by 12.3% over the year to the end of June.
The figures, which were released on Monday, illustrate an alarming rate of growth for borrowing at a time when people are squeezed by rising inflation and a slower pace of wage growth. The question is: How long can this be sustained? And should the Bank of England step in now to stop another possible catastrophic crash that could be even worse than the banking crisis we saw ten years ago?
Some people are still licking their wounds from the last financial crisis. However, here are some eyewatering statistics released in the report by UK Finance which begs the question: Is now the sensible time to protect your wealth and invest in gold?
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- Credit and charge card purchases rose by 9.3% in the year to June, outstripping a 7.2% increase in 2016, while debit card transactions grew by 13.2%, compared with a 11.7% rise last year.
- The Bank of England is asking lenders to set aside £11.4bn of extra capital to help protect the financial system from a more than 10% rise in consumer lending. However, the latest figures show credit card usage is continuing apace.
- Average credit card borrowing in the three months to the end of June was £16.1bn a month, compared with £15.8bn in the first quarter of 2017, according to the UK Finance data published on Monday. “Despite a relatively low rate of economic growth and weak consumer confidence, the second quarter of the year recorded robust growth in card spending,” the report said.
- Outstanding credit card debt stood at £68.5bn at the end of June, up by £900m from the end of April.
