Consumers suffer New Year debt hangover

Consumer debt increased for the first time since June 2009 in December, suggesting that Brits may be suffering yet another debt hangover this year.

Most turned to credit cards, with the overall borrowing on plastic reaching almost £200 million.

This follows five consecutive months of consumers paying off debts, and suggests that household margins remain tight even as the UK emerges from recession.

With some analysts expecting interest rates to rise sharply soon, this could mean worrying news for those looking to escape debt problems.

Kevin Still, director at Atlantic, said that the fall in the average level of credit to well below £20,000 confirms that those that can clear debt are doing so.

"Unfortunately," he added, "for those in serious debt the average balances are increasing." Atlantic's average level of debt is over £29,000.

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