The level of credit card and loan debt has risen during the credit crunch despite the overall level of money consumers owe having fallen.
According to a leading firm for insolvency and business recovery advice, people are using credit cards as a short-term solution to manage their bills during the recession.
A representative of the firm, explained: "The reduction in debt appears to be down to people being able to repay the capital on their mortgages because they are not paying such high interest rates, which is great news.
"The other side of this though is that there is still a large amount of credit card and loan debt and this has actually gone up. Instead of using their property as a cash machine people have been repaying debt secured on their property and using their credit cards to get by."
He said that the figures were perhaps not surprising given that people's overall savings have also depleted, illustrating an overall lack of cash flow.
However, the expert noted that people need to "stop borrowing money right now" and focus on repaying their existing debts.
Consumers were advised to repay their most expensive debt – the one with the highest level of interest – first.
The representative claimed that the UK has little chance of re-establishing a thriving economy until consumers stopped borrowing on credit cards and took steps to lower the record levels of debt the country is being stifled by.
His comments follow figures released by Credit Action, which revealed that for the first time since 1993 personal debt in the UK has fallen.
The proportion of applications accepted by the major UK lenders fell further in July, to reach its lowest rate of the year at 52.6 per cent, suggesting firms are being more responsible about whom they lend money to.
Credit Action attributed the difficulty consumers are experiencing in accessing credit from banks in the decline in personal debt levels.
It advised those still struggling with debt to refer to the Ministry of Justice's recently published series of articles and online videos advising those dealing with the threat of repossession on the most sensible and productive steps to take forward.
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