Borrowers warned against getting sucked into the biggest credit card binge in a DECADE

BORROWERS are being warned against racking up too much debt, as low interest rates fuel the biggest credit card binge in a decade.

Experts say that households have been splashing cash on holidays, clothes and cars - but it could soon turn into nightmare debt.

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Borrowing on loans and personal credit cards grew 6 per cent in the year to September - the biggest jump since before the financial crisis in December 2006, according to figures from the British Bankers Association.

Debt experts have now warned that households could be racking up too much debt.

“These figures provide serious cause for concern. The worry is that we return to the bad old days that we saw prior to the credit crunch where too many households were able to build up unsustainable balances,” a spokesman for debt charity StepChange said.

“The sad reality is that increased consumer borrowing will, for some people, turn into the nightmare of problem debt.”

"We know that households are more financially vulnerable now than they were prior to the crisis and we know that many are reliant on credit as a safety net. It is essential that lenders ensure that lending is appropriate and that affordability checks are robust”.

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In August the Bank of England cut the bank rate - which affects the level of interest passed onto borrowers - to 0.25 per cent, a record low and the first cut since 1009.

This is designed to help stimulate the economy by encouraging households to spend money, rather than stick it into savings accounts where it garners little or no interest.

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Dr Rebecca Harding, BBA’s chief economist, said: “Consumer credit is growing at its fastest rate since December 2006, driven by strong demand for personal loans and credit cards.

“Consumers are increasingly using short-term borrowing to take advantage of record low interest rates. This trend has accelerated since the Bank of England cut rates in August.”

What to do if you’ve got problem debt

Firstly, don’t bottle it up. Ignoring the issue will not make it go away and if you don’t start sorting out your financial problems then they will only get worse.

We’ve got a guide to getting out of debt in seven simple steps, including how to switch to a cheaper loan or credit card and ways you get stick to a budget.

You can get free advice from a number of charities including , and .

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